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Cfm 310-F Issues In Financial Management (Evening Class) Question Paper

Cfm 310-F Issues In Financial Management (Evening Class)

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2009

1
UNIVERSITY EXAMINATIONS: 2009/2010
THIRD YEAR STAGE 2 EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CFM 310-F ISSUES IN FINANCIAL MANAGEMENT (EVENING CLASS)
DATE: DECEMBER 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer ONE and Any other TWO Questions
QUESTION ONE
a) Mr. Chuma is currently holding a portfolio consisting of shares of four companies quoted on the
Bahati stock exchange as follows:
Company Number of
shares held
Beta equity
coefficient
Market price
per share
Expected return on
equity in the next year %
A 20,000 1.12 65 18
B 30,000 0.89 50 23
C 30,000 0.70 45 11
D 20,000 1.60 80 17
The current Market return is 14% per annum and the treasury bills yield is 9% per annum.
i) Calculate the risk of Chuma’s portfolio relative to that of the Market.
(5 Marks)
ii) Explain whether or not Mr. Chuma should change the composition of his portfolio.
(9 Marks)
2
b) Identify and discuss FIVE reasons why a company seeking to maximize the wealth of its
shareholders may wish to take over another company. (10 Marks)
c) Outline the difference between a leveraged buy-out (LBO) and management buy-out (MBO).
(6 Marks)
QUESTION TWO
a) Discuss any FIVE causes of corporate restructuring. (10 Marks)
b) Outline any FOUR consequences of corporate failure (10 Marks)
QUESTION THREE
a) Explain any FIVE benefits of E-commerce to an organization. (10 Marks)
b) Outline FIVE benefits of E-commerce to consumers. (10 Marks)
QUESTION FOUR
a) Discuss FOUR problems with global Markets. (10 Marks)
b) Outline FIVE advantages of Euro-Markets. (10 Marks)
QUESTION FIVE
a) Identify and discuss FIVE defensive tactics that a company may employ to resist an unwelcome
bid. (10 Marks)
b) Explain FIVE factors that helped the development of Euro-Markets. (10 Marks)

Cfm 310-F Issues In Financial Management (Evening Class) Question Paper

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