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Fina 432: Financial Corporate Policy Question Paper

Fina 432: Financial Corporate Policy

Course:Accounting,Finance And Investiments

Institution: Kenya Methodist University question papers

Exam Year:2013

KENYA METHODIST UNIVERSITY
END OF 1''ST ''TRIMESTER 2013 (EVENING) EXAMINATION
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING, FINANCE AND INVESTMENT
UNIT CODE : FINA 432
UNIT TITLE : FINANCIAL CORPORATE POLICY

TIME: 2 HOURS
INSTRUCTIONS
Question One
Among the key decisions makers of an organization are CEO and CFO. Explain the roles of the two officers in a company of your choice. (18 Marks)
Discuss the goals of a firm.
(12 Marks)
Question Two
Explain the different types of leasing.
(10 Marks)

What are the advantages of leasing?
(10 Marks)
Question Three
Discuss the following terms (20 Marks)
Dividend policy
Money market
Transaction cost
Cost of capital
Leverage by debt financing
Question Four
A firm might chose to rely on solely on equity financing, on a mixture of equity and debt financing or rely solely on different kinds of debts. Discuss the effect of each choice on capital structure and on corporate policy.
(10 Marks)

Discuss how stretch targets and CEO’s compensation can be used to achieve long term goals.
(10 Marks)
Question Five
Modigliani and Miller (1958) say that the value of the firm is independent of the capital structure. Discuss the assumptions of the MM theory.
(10 Marks)

Discuss the major sources of funds for an equity debt firm.
(10 Marks)

Fina 432: Financial Corporate Policy Question Paper

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