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Finance Seminar Question Paper
Finance Seminar
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2009
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2008/2009
SECOND SEMESTER EXAMINATION FOR THE DEGREE OF MASTER OF
SCIENCE (FINANCE)
BAC 602: FINANCE SEMINAR
DATE: THURSDAY, 2ND APRIL 2009 TIME: 2.00 P.M. – 5.00 P.M.
INSTRUCTIONS: ANSWER ANY FOUR QUESTIONS.
1.
Consider a study of working capital management.
(a)
State the general objective of a research such as this one.
(2 marks)
(b)
Complete the following questionnaire items by adding alternatives.
(i)
In monitoring the payment behaviour of your credit customers,
which of the following measures do you find most useful? (4 marks)
Please
choose
one
1.
2.
3.
4.
(ii)
Which of the following best describes overall the short-term
loans which you obtain from banks?
(5 marks)
Please
choose
one
1.
2.
3.
4.
Page 1 of 3
(iii)
In trying to increase the positive float (the value of the length
of time until your employees and suppliers are paid) which of the
following technique do you utilize?
(4 marks)
Please choose one
1.
Stretching the credit terms offered by the supplier
2.
3.
4.
5.
2.
(a)
Develop a list of SIX priorities to which a chairman of a financial
institution might subscribe. Financial institutions include banks,
discount houses, insurance companies, merchant banks, venture
capitalists, government funding organizations.
(12 marks)
(b)
Explain a suitable sampling strategy for the study to discover the
most important priority of the chairman of a financial institution . (3 marks)
3.
The following data was obtained from a study on the distribution of
salaries and wages in organizations.
Frequencies
Salary band over
M = male F = female
Sh28,000/month
1 0
26,000 – 27,999
10
3
24,000 – 25,999
5
2
22,000 – 23,999
5
4
20,000 – 21,999
1
1
18,000 – 19,999
8
9
16,000 – 17,999
7
9
14,000 – 15,999
8
11
12,000 – 13,999
9
16
10,000 – 11,999
12
32
8,000 – 9,999
4
12
6,000 – 7,999
0
6
70
105
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Required:
(a)
Calculate percentages across to find the total of responses
in each salary band.
(b)
Describe the pattern revealed by these percentages.
(15 marks)
4.
The new chief executive office rof an old, established company is facing a
problem. The company is currently unprofitable and is, in the CEO’s opinion
operating inefficiently.
Required:
Design a research project to help the CEO make the right decision. In answering
this question, consider the area of
finance
only.
(15
marks)
5.
(a)
State and explain five assumptions made in understanding the
elements of the capital structure and the value of the firm or the cost
of
capital
controversy.
(5
marks)
(b)
The earnings per share of a company are KSh.10. It has an internal
rate of return of 15 per cent and the capitalization rate of its risk class
is 12.5 percent.
Using Walters model
(i)
What would be the optimum payout ratio of the firm?
(2 marks)
(ii)
What would be the price of the share at this payout?
(4 marks)
(iii)
How shall the price of the share be affected if a different
Payout (20%) were employed?
(4 marks)
6.
(a)
State and explain two assumptions and two limitations of corporate
finance
theory. (5
marks)
(b)
Explain five factors which are against the M-M model assumptions
to
relevance
of
dividend
policy.
(10
marks)
**********************
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