Corporate Finance Current Papers of Final Term PDF

Corporate Finance (FIN622)
Final term Current papers

Paper 1
T Q = 50
T MCQS = 40
5*3M q
5*5M Q
Mcqs were NOT from past papers
In the context of Cash Flow Statement, categorize the following activities as operating, investing
and financing?3
• Cash received as result of issuing new shares
• Cash paid to employees as salaries
• Cash paid to acquire new plant and machinery
Describe ANY THREE possible reasons behind the failure of a merger?3
Why is it preferred to use assets based method for valuation of a target company, when the
acquirer firm is only interested to use the assets of Target Company for cash generation?3
How SWAP contracts may prove beneficial for a company?3
Write down ANY THREE strategic motives of multinational companies for investment.3
If the firm adopts a hedging (maturity matching) approach to financing, how would it finance its
current assets?5
Calculate the upper limit and return point by using the Miller Model from the following data of
ABC Company:
Transaction cost of selling & buying securities Rs. 750

Minimum cash balance Rs. 250,000
Daily cash flow variance Rs. 1,000,000
Spread Rs. 30,210
Interest rate 12% per annum
If cash has reached to a minimum cash balance (Rs. 100,000), how company can bring this
balance to the return point? 5
Briefly describe FIVE forces of industry competition that may help in identifying industry-level
causes of financial distress.5
An investor buys 7 options on shares at a price of Rs. 40 per share. These options give the right
to buy to investor. Each option consists of 50 shares and premium paid is Rs. 2 per share.
Calculate the total gain, total option cost and net gain for investor if the share price is Rs. 45 at
the expiry of option?5
Briefly explain the factors which should be considered by a multinational company for the
success of its business.5
Plz pray for me
Paper 2
My today paper 22-8-2014 8:00 am
46 MCQs
4 Q of 3 marks
5 Q of 5 marks
Q1: law of one price 3 marks
Q2: Enlist anti takeover tools 3 marks
Q3: define Miller or Model optimal level of cash 3 marks
Q4: Working capital management 3 marks
Q1: Factors for success of MNC 5 marks

Q2: calculate ROEC 5 marks
Q3: define factoring and how it help in managing A/Receivables 5 marks
Q4: An investor buys 5 options on shares at a price of Rs 50 per share. Each option
consists of 100 shares and premium paid is Rs. 2 per share. What would be the net gain for
investor if the share price is Rs. 55 at the expiry of option? Total gain + Total Option + Net gain
calculate krna tha...5 marks
Q5: find upper limit and Return point 5 marks
Paper 3
Mcqs were new but easy
subjectives are good How it is decided to exercise option or lapse3
Synergy advantages 3
Share valuation methods3
Stock price numerical 5
Costs of holding cash 5 yeh kya hai?????????
Cashflow problems 5
Future currency realted scenario 5
Calculate gain or loss on option 5
Paper 4
VU Today's Final Term Paper For Fall 2013
Total Questions = 52 of Total 80 Marks
Total MCQ = 40 Each of 1 marks
Total Short Questions = 4 Each of 2 marks
Total Short Questions = 4 Each of 3 marks
Total Long Questions = 4 Each of 5 marks
Question: It is January 1, and you have made a New Year's resolution to invest Rs.2,000 in an
Individual Retirement Account (IRA) at the end of every year for the next 30 years. If your
money is compounded at an average annual rate of 9 percent, how much will you have
accumulated at the end of 30 years?
Question: Differentiate between Management Buyout and Management Buy-In.
Question: How currency exchange risk of a floating exchange rate system differs from fixed
exchange rate system?
Question: What are the industry and firm level factors that can increase the risk of financial
distress for firms?
Question: AND manufacturer mostly sells goods on credit and has an average collection period
of 35 days. Company is recently considering two options regarding terms of credit. First option
includes terms of 3/10 net 35 with an estimation that 40% of the customers will pay within 10
days whereas remaining 60% will pay after 35 days. Second option includes terms of 3/15 net 35
days with an estimation that 60% of the customers will pay within 15 days whereas remaining
will pay after 35 days.
Required:
What will be its average collection period in both options?
Which option will result in less average collection period for AND manufacturer (ignoring the
cost of discounts)?
Question: What are the share valuation methods for Mergers & Acquisitions?
Question: A company is considering to take the loan of Rs.5 million on which it has to pay
semiannual interest at KIBOR plus 1.5%. Company intends to enter into an option against rise in
interest rates by buying a CAP at a strike rate of 8%.
There will be two expiry dates within the agreement:
Expiry
Six month KIBOR at expiry
Period
30 - June Year 1
9%
July - Dec. Year 1
31 - Dec. Year 1
6%
Jan - June Year 2
Required:
1. At which expiry date option will be exercised and why?
2. Calculate cash payment if the option is exercised.
Question: Delta Limited Company is considering investing in a project which will yield annual
cash flows of Rs. 15,000, Rs. 20,000, Rs. 23,500 and Rs. 18,000. Calculate Discounted Payback
Period of the project if discount rate is 12% and initial investment is Rs.52, 000. Comment on
feasibility of project if company has policy to accept project having discounted payback period
less than 4 years.
Paper 5
Today Paper :
50 % paper past final term may say aya
EOQ ka subjective aya
Factors due to which companies likes to work in foreign countries?
Feature of forward rate?
credit pollicy?
bs itna he yad hay
Paper 6
i gave today
-mod & mogli ka aik numerical tha
- how to create effective credit policy
-what is tick
-aik main bankA aur Bankb seller or buyer the uss main LIBOR rate se compare kar ke bantana
tha kaun bank kis ko pay karey ga
-calculate value of equity and value of leveraged firm ka numerical tha
Paper 7
my todays paper
Hedging against interest rate risk
Valutions of common shares
Credit sales
Law of one price
Factors of multinational company
2 quations numeric(varience and FRA)
Paper 8
Just finished my today Paper and sharing with you guys
MCQs were mostly from past papers.

Question: It is January 1, and you have made a New Year's resolution to invest Rs.2,000 in an
Individual Retirement Account (IRA) at the end of every year for the next 30 years. If your
money is compounded at an average annual rate of 9 percent, how much will you have
accumulated at the end of 30 years?
Question: Differentiate between Management Buyout and Management Buy-In.
Question: How currency exchange risk of a floating exchange rate system differs from fixed
exchange rate system?
Question: What are the industry and firm level factors that can increase the risk of financial
distress for firms?
Question: AND manufacturer mostly sells goods on credit and has an average collection period
of 35 days. Company is recently considering two options regarding terms of credit. First option
includes terms of 3/10 net 35 with an estimation that 40% of the customers will pay within 10
days whereas remaining 60% will pay after 35 days. Second option includes terms of 3/15 net
35 days with an estimation that 60% of the customers will pay within 15 days whereas remaining
will pay after 35 days.
Required:
What will be its average collection period in both options?
Which option will result in less average collection period for AND manufacturer (ignoring the
cost of discounts)?
Question: What are the share valuation methods for Mergers & Acquisitions?
Question: A company is considering to take the loan of Rs.5 million on which it has to pay
semiannual interest at KIBOR plus 1.5%. Company intends to enter into an option against rise in
interest rates by buying a CAP at a strike rate of 8%.
There will be two expiry dates within the agreement:
Expiry Six month KIBOR at expiry Period

30 - June Year 1 9% July - Dec. Year 1
31 - Dec. Year 1 6% Jan - June Year 2
Required:
1. At which expiry date option will be exercised and why?
2. Calculate cash payment if the option is exercised.
Question: Delta Limited Company is considering investing in a project which will yield annual
cash flows of Rs. 15,000, Rs. 20,000, Rs. 23,500 and Rs. 18,000. Calculate Discounted Payback
Period of the project if discount rate is 12% and initial investment is Rs.52, 000. Comment on
feasibility of project if company has policy to accept project having discounted payback period
less than 4 years.
Paper 9
my today paper of Fin622
MCQ are from past papers some were new but easy
long question
1.equity beta using pure play method.. 3 marks
2.what types of costs firm face by credit sales.
3.reason of valuing share in mergers.
4.comment on intrerest rate futures and bond future have same settlement method.
5.factors in which firm face financial distress.
6.An investor buys 5 options on shares at a price of Rs 50 per share. Each option
consists of 100 shares and premium paid is Rs. 2 per share. What would be the
net gain for investor if the share price is Rs. 55 at the expiry of option? 5 marks
solution:
Total share is 5 *100 =500
Total cost of option is 500*52=26,000
Total Sale Value = 500 * 55 = 27500
Net Gain = 27500 – 26000= 1500
7.find sales and break even in units values given was given.
8. yaad nhi a raha
Paper 10
my today paper
5 marks questyions
3 projects given
calculate NPV and which one is acceptable according to NPV
2)same example of handouts page 134
define factoring and how it help in managing A/Receivables
4) factors for success of multinational company.
3 marks questions.
how financial distress could be gauged
break even revenue, FC= 152000 cs ratio 39% again FC 120000 what is effect of
change of FC on BER
2 yad nai arahy
Paper 11
My Paper was at 4:30 today..........
MCQs from old paper
1- Factoring 5 marks
2- Why organizations do not minimum and maximum cash balances
3- 2 Numerical one from FCY payment in future:
4- Merger and Acquisition Process determining the Target company.
5- Futures interests and bounds are same explain.......
Paper 12
My today paper of FIN622 at 08:00
1- Briefly described the role of of "White knight" as a anti takenover it (5)
2- If Interest tax shield are valuable, Why don't all tax (5)
4- Brifly describe the step of merger & aquisitions?(5)
3- What limited factor and how to identify financial planning? (3)
5- Describe the impact of increase current future on long term?
6- Option is exercise , Briefly explain (3)
Paper 13
Mine own paper today
Hedging against interest rate risk 3 marks
How customer credit worthiness is evaluated? (page 104) 3marks

Valuation of shares (page 114) 3 marks
Purchase and consolidation merger (page 110) 5 marks

Calculate growth rate ‘g’ numerical (5)
Numerical related to option. Total gain, net gain, total option cost find krni thi (5)
6 cases given thay or un ka net working pr affect btana tha. (5)
Paper 14
My TODAY paper
95% MCQ totally past papers ...from afaaq ki file sy
1. financial benifits of merger and acquisition....3 marks

2. Tick explain with example..3 marks
3. short term interest rate future and bond future are same sattlement method... why
give reson...3 marks
4 Total gain + Total Option + Net gain calculate krna tha...5 marks
5. case dia gya tha ...curren value of bond future find krna tha ....5 marks
6. what is limited factor & how identification can help a firm in financial planning.... 5
marks
7. cost of discount + EAR find krna tha 5 marks
8. calculate ROEC and suggest company dispose asset or not give comments 5 marks
Paper 15
Final Term paper on 4-03-2013 by

Owais Shafique
Total 60 Questions for 86 Marks. Time 120 Minutes

There were 52 MCQs,
Several MCQs were quite easy but some were very tough…!!!!
Short Questions:
1. What are the features of forward rate agreement? (3 Marks)

2. What are the share valuation methods used in Mergers and Acquisitions? (3 Marks)
3. How customer credit worthiness is evaluated? (3 Marks)
4. Why Sunk cost is non-relevant and opportunity cost is relevant? (5 Marks)
5. Explain the role of a “White Knight” in a hostile takeover attempt? (5 Marks)
6. What is the purpose of cash flow statement and differentiate between cash flow
statement and cash budget? (5 Marks)
7. Bank A (Buyer) and Bank B (Seller) enter a forward interest rate agreement based
on
LIBOR and effective rate in the agreement is 9%. (5 Marks)
a. Which bank pays when LIBOR is 8% and why?
b. Which bank gets paid when LIBOR is 10% and why?
8. One Company needs 500,000 in short run. It has two options either to borrow the
amount
at an annual interest rate of 18% or defer payment to supplier and loose the discount
opportunity of 2/10, n/60? (5 Marks)
a. Calculate EAR (Effective Annual Rate) based on the data given above?
b. Which option should the business use based on the effective annual rate calculated
in the above part?
Paper 16
Paper boht tough th... MCQs past papers say aye th aur long ye th....
1: Numeric Question (5 Marks)
2: Difference b/w long portion & Short Portion (5 Marks)
3: Benefits of Merger (5 Marks)
4: Multi-National reduce politics discuss (3 Marks)
5: Define EAR (3 Marks)
6: Define Tick (3 Marks)
7: Define short term investment are priced (3 Marks)
8: Y mergers fail discuss (3 Marks)
In ko achi tarha parh lana.. bcaz ak do question insha'Allah repeat hon gaye..
Paper 17
54 Mcqs question thy
3 questions of 3
5 questions of 5
3 marks question:
• Benefits of acquisitions company for acquisitions company?
• Why assets base valuation method preferfor in acquisions of company?
• Third question was figure out projects relevant and non relevant costs?
5 mark questions:
• Why exchange rates floating between countries?
• What is leverage payout ? briefly note
• Third question related to ratios calculation?
Paper 18
1.using hedge approach , define currency option (3 marks)

2.define credit policy , credit collection ,discount ,credit standars. (5 marks)
3.why a project with +ve NPV should be selected and y -ve NPV project shoud not be selected
4.Y it is preferred to select assets base method. y a marger want to acquire a firm with assets
5.y probability analysts use probability for financial feasibility.
im posting these in my own words......
Allah bless all....pray 4 me.
Paper 19
Dear All Vu Members,
FIN622 July 22,2012 2:30 PM Long question which i had attempted are given below:
1- How many kind of merger and how much beneficial for firm to merger (3 marks)
2- Accounts Receivable is more liquid than inventories briefly explain (3 marks)
3- How can we achieve long term capital structure explain it (5 marks)
4- What do you understand leverage Buy out explain it (5 marks)
5- enlist the anti take over tools from predator (3 marks)
6- how can control MNC (multinational companies) political risk (5 marks)
7- what is option price ? (3 marks)
one question was related to asset based merger and share based merger
Thanks
Regards
Rehan Bashir (Please remember me in your prayers
Paper 20
OVERSEASE STUDENT 20-JULY-2012 EXAM

3 questions of 3
5 questions of 5
1. Enlist the types of Mergers. How firms reduce their overall risk through mergers?
2. How much should you pay for a bond with Rs.1,000 face value, a 14 percent coupon rate,
and 5 years to maturity if your appropriate discount rate is 10 percent and interest is paid
annually?
3. How much should you pay for a bond with Rs.1,000 face value, a 14 percent coupon rate, and
5 years to maturity if your appropriate discount rate is 10 percent and interest is paid
annually?
4. How Economic Order Quantity (EOQ) Model is helpful in the reduction of total inventory
costs?
costs?
6. Differentiate between the lower bound and the upper bound to the price of a call option
Paper 21
FIN622 final term 23 july share by our member aisha butt
MCQ todaly new and difficult
Long question as under
1: currency option
2: Financial destres forward rate agrement EoQ
3: Optimal cash numercial merger transaction
4: Price of bond numerical
Paper 22
fin 622
22-07-2012
1- currency option
2- meger transcation
3- optimal cash numerical
4- bond (numerical)
5- EOQ
6- Financial distress
7- forward rate agreement
others not remember now....
mcqs was all new...........
Paper 23
Post: #1
FIN622 Today Paper Session 2 Rahim Yar Khan
3 questions of 3
5 questions of 5
3 marks question:
§ Benefits of acquisitions company for acquisitions company?
Why assets base§ valuation method preferfor in acquisions of company?
Third question was§ figure out projects relevant and non relevant costs?
5 mark questions:
§ Why exchange rates floating between countries?
What is leverage payout ?§ briefly note
Third question related to ratios calculation?§
Paper boht tough th... MCQs past papers say aye th aur long ye th....
1: Numeric Question (5 Marks)
2: Difference b/w long portion & Short Portion (5 Marks)
3: Benefits of Merger (5 Marks)
4: Multi-National reduce politics discuss (3 Marks)
5: Define EAR (3 Marks)
6: Define Tick (3 Marks)
7: Define short term investment are priced (3 Marks)
8: Y mergers fail discuss (3 Marks)
In ko achi tarha parh lana.. bcaz ak do question insha'Allah repeat hon gaye..

3 questions of 3
5 questions of 5
3 marks question:
• Benefits of acquisitions company for acquisitions company?
• Why assets base valuation method preferfor in acquisions of company?
• Third question was figure out projects relevant and non relevant costs?
5 mark questions:
• Why exchange rates floating between countries?
• What is leverage payout ? briefly note
• Third question related to ratios calculation?
.using hedge approach , define currency option (3 marks)

2.define credit policy , credit collection ,discount ,credit standars. (5 marks)
3.why a project with +ve NPV should be selected and y -ve NPV project shoud not be selected
4.Y it is preferred to select assets base method. y a marger want to acquire a firm with assets
5.y probability analysts use probability for financial feasibility.
im posting these in my own words......
Allah bless all....pray 4 me.
Dear All Vu Members,

FIN622 July 22,2012 2:30 PM Long question which i had attempted are given below:
1- How many kind of merger and how much beneficial for firm to merger (3 marks)
2- Accounts Receivable is more liquid than inventories briefly explain (3 marks)
3- How can we achieve long term capital structure explain it (5 marks)
4- What do you understand leverage Buy out explain it (5 marks)
5- enlist the anti take over tools from predator (3 marks)
6- how can control MNC (multinational companies) political risk (5 marks)
7- what is option price ? (3 marks)
one question was related to asset based merger and share based merger
Thanks
Regards
Rehan Bashir (Please remember me in your prayers )
•
Permalink Reply by okwaqar yesterday
OVERSEASE STUDENT 20-JULY-2012 EXAM
3 questions of 3
5 questions of 5
1. Enlist the types of Mergers. How firms reduce their overall risk through mergers?
2. How much should you pay for a bond with Rs.1,000 face value, a 14 percent coupon rate,
and 5 years to maturity if your appropriate discount rate is 10 percent and interest is paid
annually?
3. How much should you pay for a bond with Rs.1,000 face value, a 14 percent coupon rate, and
5 years to maturity if your appropriate discount rate is 10 percent and interest is paid
annually?
costs?
costs?
6. Differentiate between the lower bound and the upper bound to the price of a call option
Pls remember me in ur pray
Paper 24
in622 Current Paper of Mr. Gul 16-07-2011
Salam,
Total 64 Questions
56 MCQz = 56
4 Long Question of 3 = 12
4 Long Question of 5 = 20
Total Marks = 88
MCQz 80% past, 20% new but easy
Long Questions 75% New
1. Define a tick
2. How Firm A can acquire a Private Limited Company
3. How can we hedge through option
4. Why option is exercised and when allowed to laps
5. One Question Calculation of EOQ
6. One Question Calculation of NPV
7. Define EOQ Model and its uses
8. Define benefits of short cash cycle
CURRENT 2 PAPERS LONG QUESTIONS

SOLVED
BY KAAAMI
What is tick?
A tick is the minimum price movement of a contract. For example, the movement in
US$ / PKR rate from 60.1501 to 60.1505, means the rate has risen four ticks. Every
tick movement in price has same money value. For example, sterling/us$ contract
standard size is sterling 62,500/-. The price is in us$ and tick size is $ 0.0001, which
means each tick value is $ 6.25. If a trader is holding a long position and price of future
increases, then there’s profit and fall in value represents loss. If trader is holding is
short position, rise in future value represent a loss, fall in price profit. Like forward
contracts, currency futures have also two-scenario: receipt of FCY and payment
involving FCY.
My answer:-
The minimum movement in the price of a stock, financial asset e.g., bonds,
debentures, securities etc., and in forex market is called a tick. The tick size may be
different in the each of above said markets. For example, a tick size is $0.01 in US
stock market. At the same time, the tick size may be different in the forex market for
example a change in the price of dollar in front of Rupee may go up for Rs. 0.01, such
minimum change will be called a tick.
How Firm A can acquire a Private Limited Company
Private limited companies are one kind of joint stock companies which differs from the
public limited companies. The shares of the private limited companies are not traded in
the financial markets and they are not restricted to maintain such kind of statements
maintained by the public limited companies under the Law. This scenario makes it
difficult to judge the fair position and value of the Pvt Ltd company. The acquiring
process becomes more complex but there exists some techniques discussed hereunder
from which we can valuate the victim company.
Income Based Approach

Present value method:
The present value approach is used to know the present value of future cash flows of
the company’s asset. The present value and discount rates may be different for each
asset. The formula of the same is as under:-
Value =CFt/ (1+r) t

where
n = Life of the asset
CFt = Cash flow in period t
r = Discount rate reflecting the risky-ness of the estimated cash flows
Dividend Valuations method:

The dividend valuation method is also a primary tool to valuate the Pvt Ltd. company
in question. The CAPM approach and the required rate of return approach may be used
under this heading.
P/E method
The P/E approach is used to know the trend of the company earning. If the company
have high P/E ratio, it means the company is consistently growing. The future
expectations lying with the business and the shares are secured. While on the other
side, low P/E ratio present the inverse of the situation narrated above. The formula of
P/E ratio is as under:-
P/E ratio can be defined as = Price per share / EPS
Asset based approach:
Book value:-
The book value of the assets may be analyzed to find out the cost price of the
assets accompanying with the company in question.
Replacement cost
We can evaluate what it would cost us to replace all of the assets of the company.
Break up value:-
Breakup value represents the minimum price which should be accepted for the
sale of a business. However, when a break up is considered in this way it must be
remembered to include such items as
3. How can we hedge through currency option?
Currency option is a right of buyer to buy or sell (but not obligation) a fixed amount of
underlying currency at fixed price (stricke price) on a fix expiry date. We should
consider the following before using hedge with currency option:-
i. The extent of exposure and the currency involved – future receipt and
payment to be determined.
ii. Consider the hedging tool – a call or put option will serve the purpose.
iii. Calculate the most suitable strike price out of several available.
iv. Option will be only exercised if it is in the money and buy or sell the
currency at the strike price.
v. Alternatively, let the option lapse if it is out of money. Progress
4. Why option is exercised and when allowed to laps

An option is a contract that confers a right to buy or sell a specific quantity or asset –
but not the obligation, at agreed price on or before the specified future date. Options
are available for commodities (like wheat, coffee, sugar, etc) and financial assets like
currency or bank deposits.
Features of Options:
It is a contractual agreement.
The holder of option exercises his/her right only if it is in his/her favours.
Option writer is seller and must honor his side of contract. (Sell or buy at agreed price).
Options like futures are standardized transaction in terms of size & duration.
Options are Exchange traded
These agreements are easy to buy & sell
Options either are call options or put options.
The option purchase price is called option premium.
Call option gives its holder a right (not obligation) to buy underlying item at the
specified price.
Put option gives its holder a right (not obligation) to sell underlying item at specified
price.
Expiry date:
Each option has expiry date and the holder must exercise his/her right before this date
otherwise, it will lapse.
7. Define EOQ Model and its uses

Economic order quantity
EOQ The amount of orders that minimizes total variable costs required to order and
hold inventory.
In other words, economic order quantity is that size of quantity of the order which
gives maximum economy in purchasing any material and ultimately contributes
towards maintaining the material at the optimum level and minimum cost.
While setting economic order quantity, two types of cost should be taken into account:
1. Ordering Cost: This is the cost of placing an order with the supplier. Because of so
many factors
involved, it is quite difficult to quantify this cost. It mainly includes the cost of
stationary, salaries of
those engaged in receiving and inspection, salaries of those engaged in placing an
order, etc.
2. Cost of Carrying Stock: This is the cost of holding the stock in storage.
It includes the following:
(a) cost of operating the stores,(salaries, rent, stationary)
(b) the incidence of insurance cost;
(c) interest on the capital locked up in store;
(d) Deterioration and wastage of material.
Economic order quantity is a level of quantity of ordering where all the costs are
minimized and it is the most economical to place the order. Economic order quantity
minimizes the total cost and it is used especially for re-stock purpose in the business.
8. Define benefits of short cash cycle
Cash Conversion Cycle, also known as the asset conversion cycle, net operating cycle,
working capital cycle or just cash cycle, is used in the financial analysis of a business.
A short cash conversion cycle indicates good working capital management.

Conversely, a long cash conversion cycle suggests that capital is tied up while the
business waits for customers to pay. It is possible for a business to have a negative
cash conversion cycle, i.e. receiving customer payments before having to pay
suppliers. Examples are typically companies that employ Just in Time practices such as
Dell, and companies that buy on extended credit terms and sell for cash, such as Tesco.
The longer the production process, the more cash the firm must keep tied up in
inventories. Similarly, the longer it takes customers to pay their bills, the higher the
value of accounts receivable. On the other hand, if a firm can delay paying for its own
materials, it may reduce the amount of cash it needs. In other words, accounts payable
reduce net working capital.
Diffrence B/W growth stock and income stock (3 marks)
growth stocks are

- higher risk
- often cheaper in price
- often from emerging countries
- are concered with capital growth not dividend income
- are companies that have not reached their full potential
Income stock is a stock with a history of paying consistently high dividends. Growth
stock is stock of a company which is MORE
2) Described the steps in credit management (3 marks)
The following section will shed light on credit control policy and its components.
a) Terms of sale
b) Credit analysis
c) Collection policy
Terms of sale refer to the conditions on which the company will sell its good to the
customers on cash or credit. The most important issues under these terms are the credit
period and the discount level and discount period. In order to induce the debtors to
settle their invoices at the earliest the company offers a discount or reduction in the
invoice amount. That discount is predominantly based on receiving the payment within
a very short period of time compared with normal credit period. For example, the
normal terms representing the period and discount are described as “3/10, net 45”. This
means that the credit period is 10 days. The credit period is the length of time that is
allowed to
debtors to pay off their bills. It will vary business to business and firm to firm.
Normally this period is between 30 to 60 days, however, 90 days credit is not very un-
common. Credit period count runs from the invoice date but can be the point of
delivery of goods. Length of credit period is influenced by several factors but the most
important is the buyer’s operating cycle and inventory period. Before moving ahead,
let’s take up operating cycle concept.
2 – Accounts receivable period – the time to recover the sales.

In our example, March 01 to April 15 – 45 days period is termed as accounts
receivable period. It should be noted that by extending credit to buyer, we finance a
portion of buyer’s operating cycle and shorten buyer’s cash cycle. And if seller’s credit
extension period exceeds the buyer’s inventory period, then seller is not only financing
the buyer’s inventory purchases but also a part of the receivable as well. On the other
side if seller’s credit extension period exceeds the buyer’s operating cycle, then seller
is effectively financing the buyer’s need beyond the purchase and sale of seller’s
merchandise. The other factors that influence the credit period decisions are:
3)steps involved in merger and acquision (5 marks)
1. The first step is to determine the target sector and the company in which we
wants to merge or acquire.
2. After targeting, ascertain basic information, e.g. skills of staff, expertise, payroll,
structure, and apportionment terms; benefit plans etc., of the company in question.
3. Analyze historic sales, trends, products, strength, market share and market
reputation.
4. Obtain technical expertise to run the target company for future development,
research, and growth.
5. Establish prevailing financial situation as well as the past information.
6. Obtain details of the liquidity of the company i.e. details of bank accounts,
collaterals against loans, details of agreements like leases, forward rates, etc.
7. Hire the legal and financial consultants to finalize the details proposed scheme of
merger
8. If the object company’s rules permits continuation the business by amalgamation
(transfer), if not, then suitable amendments should be made in the company act.
9. Notify the stock exchange about the offer of the merger made and approved by
regional stock exchange.
10. The proposed scheme of merger should be submitted to the Board of Director of
each company for their approval.
11. The scheme, once approved by the Board of Directors, should be placed before
shareholders at a general meeting for their approval. It is not a legal necessity, but the
company in practice gets the scheme approved by its shareholders before they file an
application for the sanction of the court.
12. Transfer of Assets and Liabilities, issuance of Shares, etc.
Finally, the companies can implement the scheme by transferring assets and liabilities
by issuing of shares and given any other consideration to the members of the
amalgamating company, as per the scheme of merger.
4) How a hedge could be established with currency

option (5 marks)
Currency option is a right of buyer to buy or sell (but not obligation) a fixed amount of
underlying currency at fixed price (stricke price) on a fix expiry date. We should
consider the following before using hedge with currency option:-
Papers Solved Exam Result Activity Added Approval
B ed exam result Chat Room Design Education Grants
1 vi. The extent of exposure and the currency involved – future receipt and
payment to be determined.
2 vii. Consider the hedging tool – a call or put option will serve the purpose.
3 viii. Calculate the most suitable strike price out of several available.
4 ix. Option will be only exercised if it is in the money and buy or sell the
currency at the strike price.
5 x. Alternatively, let the option lapse if it is out of money. Progress
Paper 26
my today ppr of fin-622 Sad subjective here....

1. Give at least three reasons of merger failure and explain each of them briefly.3
marks
2. If a firm is facing cash flow problems, what steps would you suggest to the firm to
overcome its cash flow problems?5 marks
3. How a firm can create a hedge against interest rate risk? Explain briefly. 5 marks
4. Suppose a firm is planning to borrow some amount in a short-term period. How this
firm can create a hedge against rising interest rates? 5 marks
5. Differentiate between the Forward Contract and Currency Future. 5 marks
Fin622 current paper subjective (14/2/2011)

Q: Type of merger and how companies reduce risk in merger (3 marks )
Q: Difference between the following : (5 marks )
Credit period
Credit standard
Collection period
Discount
Q: Method of valuation of share in merger & acquisition (5 marks)

Q: Suppose a firm is planning to borrow some amount in a short-term period. How this
firm can create a hedge against rising interest rates? (5 marks)
How Short-Term Interest rate future are Priced? Explain With help of Some
Examples? (3 Marks)
Enlist the Anti-Takeover Measure to be taken by a Target Company to resist a

Takeover Bid of the Predator Company.
(3 Marks)
Acquiring Companies often prefer Purchase Mergers to Consolidation Merger. Why?
(3 Marks)
How Forward Rates are Determined in foreign Currency Market? Explain Briefly.
(5 Marks)
How a Multinational Firm could reduce Political Risk?

(5 Marks)
Differentiate Between the Following Variable of a Credit Policy: (5 Marks)

1) Credit Period
2) Credit Standard
3) Collection Policy
4) Discounts
Suppose You Invest Rs 400,000 in Treasury bill and Rs 600,000 in Marketable

Portfolio. What is the Return on your Portfolio, If bills yield 6% and the Expected
Return on Market is 14%. What does return on this Portfolio imply for Expected
Return on Individual Stock with Beta of 0.6?
(5 Marks)
Describe briefly anti-takeover tools used by target firms to terminate the predator’s
attack. 3
A firm is facing cash shortage. Firm can get short term loan from bank annual interest
on bank loan is 18% and also firm can delay payment to supplier which terms 2/10 net
60. in your opinion what firm should do? 3
What is mean by long position and short position of foreign currency traders in the
currency market? 5
. Suppose a firm is planning to borrow some amount in a short-term period. How this
How a firm can create a hedge against interest rate risk? Explain briefly. 5 marks
The Inventory Manager of a firm has given the following data: 5
Consumption per Period = S = 4000 Units
Economic Order Quantity = EOQ = 80 Units
Lead Time = L = 1 Month
Stock out Acceptance Factor = F = 1.10
Requirement:
Determine the Economic Order Point for the firm
Paper 27
attack. 3
A firm is facing cash shortage. Firm can get short term loan from bank annual interest
on bank loan is 18% and also firm can delay payment to supplier which terms 2/10 net
60. in your opinion what firm should do? 3
currency market? 5
. Suppose a firm is planning to borrow some amount in a short-term period. How

this firm can create a hedge against rising interest rates? 5 marks

Requirement:
Credit period
Credit standard
Collection period
Discount
Today i give fin622 paper it was not so easy most mcqs were from past paper but
subjective was very tough.here are some subjective question
1:Analyze credit policies and explain these
Policy collection
credit period
discount
credit standarlization.
2:what is meant by payoff ?

3:If american exporter sold goods to pakistani importer and pakistani importer
promised to american that he will pay amount after 3 month.then what will be the
currency risk or currency effect will be made for american exporter?
4:How a firm can create a money market hedge against transaction exposure,when the
firm has to make a payment at some future date?
aur financial feasibility se relative koi question aye the sorry i forget.
oday was my paper of fin 622 the paper was neutral .
Total 69 questions
64 MCQS
and 5 long questions mcqs are mostly from the past papers while long questions ere
mostly theory related no numerical .
Paper 28
How Short-Term Interest rate future are Priced? Explain With help of Some
Examples? (3 Marks)
Enlist the Anti-Takeover Measure to be taken by a Target Company to resist a

Takeover Bid of the Predator Company.
(3 Marks)
(3 Marks)
(5 Marks)

(5 Marks)

1) Credit Period
2) Credit Standard
4) Discounts
Suppose You Invest Rs 400,000 in Treasury bill and Rs 600,000 in Marketable

Portfolio. What is the Return on your Portfolio, If bills yield 6% and the Expected
Return on Market is 14%. What does return on this Portfolio imply for Expected
Return on Individual Stock with Beta of 0.6?
(5 Marks)
62 MCQS PLUS 7 Subjective

Paper Was Very Easy…. Only 2 new mcqs which were easy too… rest from Past
papers and quizzes.. OverAll... Acha ho gaya...
Subjective which I have submitted is as under… please check …
1. What are the costs and benefits of holding inventories? 3 Marks

(ISKI SAMJAH NHI AYI) BT LIKH AYA HUN)
Benefits.
Inventory will be available to meet sales.
There will be no stock outs and no danger of rejection of order placed by customers.
Costs
Carrying costs, re-order costs etc will be more if less inventory is maintained.
If a huge amount of inventory I to maintained then a lot of capital must be invested in
inventories. So there will be no capital for other opportunities.
2. How it is decided to exercise an Option Contract or allowed it to lapse? Briefly

explain. 3
Everyone looks for his/her profit. An option gives the holder right, not an obligation, to
buy/sell assets on some future date. So if the strike price of an option is favorable i.e.
less than market price then it will be termed as “In the Money” and will option holder
will exercise it.
On the other hand if the strike price is not favorable i.e. higher than the market price it
will be termed as “Out of Money” and option holder will not exercise it and will allow
it to lapse.
3. Enlist the anti-takeover measures to be taken by a Target company to resist a

takeover bid of the predator company. 3
Some of the anti-takeover tools used by Target company to resist takeovers are listed
below;
Poison pill
White knight
Shark repellent
Counter offer
Pac man
Political pressure
Disposal of key assets
4. What is the payoff to buyers and sellers of call and put options? 5
Call option gives its holder the right, not the obligation to buy underlying item at the
specific price.
Put option gives its holder a right, not the obligation to sell underlying item at the
specific price.
The strike price of an option may be lower, higher or equal to to the market price of
underlying asset.
So the seller must have to sell and buyer must have to buy if other party decides to
exercise the option no matter what it costs to them. So they can bear a loss.
It’s a kind of agreement in which both the parties cannot be satisfied and one have to
bear the loss.
5. The Inventory Manager of a firm has given the following data: 5
Requirement:
Determine the Economic Order Point for the firm.
Solution
EOP = SL + F *sqrt(S x EOQ x L)
Where
S= Consumption per Period
L= Lead Time
F= Stock out Acceptance Factor
EOQ = Economic Order Quantity
EOP = 4000 x 1+ 1.10 * sqrt(4000 x 80 x 1)

EOP = 4000 + 1.10 * sqrt(320,000)
EOP = 4000 + 1.10 (565.68)
EOP = 4000 + 622.25
EOP = 4622.2.
6. How much should you pay for a bond with Rs.1,000 face value, a 14 percent
coupon rate, and five years to maturity if your appropriate discount rate is 10 percent
and interest is paid semiannually? 5
Please Check This Solution…. Time was short…. Jo zehen mein aya Kar aya…
Face Value = 1000

Coupon Rate = 14%
Years to Maturity = 5 years
ROR = 10%
Present Value = 140/(1+10%/2)^2 + 140/(1+10%/2)^4 + 140/(1+10%/2)^6 +

140/(1+10%/2)^8 + 140/(1+10%/2)^10 + 1000/(1+10%/2)^10
= 126.98 + 115.178 + 104.47 + 94.76 + 85.95 + 613.91 = 1141.25

7. Enlist the share valuation methods for Mergers & Acquisition. 5
Share Valuation Methods used in M&A can be divided into two main categories.
1. Income Based Approach:
Following methods are used in income based approach.
Present value method
Dividend valuation
P/E ratio
2. Asset based approach:

Asset Based Methods are as follows
Paper Pattern Papers Exam Result & Activity Added
Approval B ed exam result Chat Room Design
Book value
Breakup value
Replacement cost
my today ppr of fin-622 Sad subjective here....

1. Give at least three reasons of merger failure and explain each of them briefly.3
marks
plz must read ppt slides n lectures...
Fin622 current paper subjective (14/2/2011)


Credit period
Credit standard
Collection period
Discount
Paper 29
Aoa . I attempted my fin622 ppr today. 50% mcq were new for me. Subjective were as follows:-
Q1. Explain three sources of synergies. 3marks
Q2.Explain features of currency options. 3marks
Q3. Explain features of forward rate agreements. 3marks
Q4. Explain what is the margin in a call & put option. 5marks
Q5. Find NPV from given data using 10% interest rate.
years Cash flow

1 1000
2 1000
3 (2000)
4 3000
Q6. Explain how EOQ model is beneficial for a company in relation to minimizing its inventory
costs. 5marks
Credit period
Credit standard
Collection period
Discount
What are the financial benefits of mergers and acquisitions to the acquiring firm? 3
How fixed exchange rate system is different from a floating exchange rate system.
Briefly explain 3
Give at least three reasons of Management Buy Out. 3
What (high, Low) level of debt financing would you suggest for the following firms 5
1. A firm with High taxes

2. A firm with no taxes
When cash flow face problems suggest steps to over come. 5
How a hedge could be established with currency option. Explain briefly 5
Differentiate spot rates and forward rates of currencies. Why forward rates are
different than spot rates. 5
622 Todays Papper

[i][b][b]How Short-Term Interest rate future are Priced? Explain With help of Some
Examples? (3 Marks)
Enlist the Anti-Takeover Measure to be taken by a Target Company to resist a Takeover

Bid of the Predator Company.
(3 Marks)
(3 Marks)
(5 Marks)

(5 Marks)

1) Credit Period
2) Credit Standard
4) Discounts
Suppose You Invest Rs 400,000 in Treasury bill and Rs 600,000 in Marketable Portfolio.
What is the Return on your Portfolio, If bills yield 6% and the Expected Return on
Market is 14%. What does return on this Portfolio imply for Expected Return on
Individual Stock with Beta of 0.6?
(5 Marks)
80% MCQ’S WERE FROM PAST

FIN621 ALL SBJCTIVE QUESTIONS FROM LATEST PAPERS IN ONE FILE
FINAL TERM FEBRUARY 2011
Total 69 questions
64 MCQS
and 5 long questions mcqs are mostly from the past papers while long questions ere
mostly theory related no numerical .
Give at least three reasons of merger failure and explain each of them briefly.3 marks
plz must read ppt slides n lectures.....
1:Analyze credit policies and explain these

Policy collection
credit period
discount
credit standarlization.
2:what is meant by payoff ?

3:If american exporter sold goods to pakistani importer and pakistani importer promised
to american that he will pay amount after 3 month.then what will be the currency risk or
currency effect will be made for american exporter?
4:How a firm can create a money market hedge against transaction exposure,when the
firm has to make a payment at some future date?
Credit period
Credit standard
Collection period
Discount
attack. 3
A firm is facing cash shortage. Firm can get short term loan from bank annual interest on
bank loan is 18% and also firm can delay payment to supplier which terms 2/10 net 60. in
your opinion what firm should do? 3
currency market? 5
. Suppose a firm is planning to borrow some amount in a short-term period. How this
Requirement:

FIN622 ALL SBJCTV QUES FRM LATST PAPRS FEB 2011**
1. What are the costs and benefits of holding inventories? 3 Marks
2. How it is decided to exercise an Option Contract or allowed it to lapse? Briefly
explain. 3
3. Enlist the anti-takeover measures to be taken by a Target company to resist a takeover
bid of the predator company. 3
4. What is the payoff to buyers and sellers of call and put options? 5
5. The Inventory Manager of a firm has given the following data: 5
Requirement:
Determine the Economic Order Point for the firm.

Solution
EOP = SL + F *sqrt(S x EOQ x L)
Where
S= Consumption per Period
L= Lead Time
F= Stock out Acceptance Factor

EOQ = Economic Order Quantity
EOP = 4000 x 1+ 1.10 * sqrt(4000 x 80 x 1)
EOP = 4000 + 1.10 * sqrt(320,000)
EOP = 4000 + 1.10 (565.68)
EOP = 4000 + 622.25
EOP = 4622.2.
6. How much should you pay for a bond with Rs.1,000 face value, a 14 percent coupon
rate, and five years to maturity if your appropriate discount rate is 10 percent and interest
is paid semiannually? 5
Please Check This Solution…. Time was short…. Jo zehen mein aya Kar aya…
Face Value = 1000
Coupon Rate = 14%
Years to Maturity = 5 years
ROR = 10%
Present Value = 140/(1+10%/2)^2 + 140/(1+10%/2)^4 + 140/(1+10%/2)^6 +

140/(1+10%/2)^8 + 140/(1+10%/2)^10 + 1000/(1+10%/2)^10
= 126.98 + 115.178 + 104.47 + 94.76 + 85.95 + 613.91 = 1141.25
7. Enlist the share valuation methods for Mergers & Acquisition. 5
How Short-Term Interest rate future are Priced? Explain With help of Some Examples?
(3 Marks)
Enlist the Anti-Takeover Measure to be taken by a Target Company to resist a Takeover

Bid of the Predator Company.
(3 Marks)
(3 Marks)
(5 Marks)
(5 Marks)
1) Credit Period
2) Credit Standard
4) Discounts
Suppose You Invest Rs 400,000 in Treasury bill and Rs 600,000 in Marketable Portfolio.
What is the Return on your Portfolio, If bills yield 6% and the Expected Return on
Market is 14%. What does return on this Portfolio imply for Expected Return on
Individual Stock with Beta of 0.6?
(5 Marks)
Credit period
Credit standard
Collection period
Discount
My today's paper of FIN622 Feb 23 2011
MCQS from past papers and quiz
all subjective question were new no any from past paper or recent shared papers Sad
3 question from EOQ numerical question

Management buyout and buy in
and 3 more numerical question
.pdf Fin 622 all in one final term papers.pdf (Size: 1.25 MB / Downloads: 5)
.pdf fin622 final term subjective by Adnan awan.pdf (Size: 239.45 KB / Downloads: 5)
.doc FIN622 Quiz#4_183MCQs_Solved repeated ignored.doc (Size: 153 KB /
Downloads: 0)
MBA 3rd (Finance)
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Corporate Finance (FIN622)

Final term Current papers

Describe ANY THREE possible reasons behind the failure of a merger?3

How SWAP contracts may prove beneficial for a company?3

Transaction cost of selling & buying securities Rs. 750

Q1: Factors for success of MNC 5 marks

MCQs were mostly from past papers.

Expiry Six month KIBOR at expiry Period

How customer credit worthiness is evaluated? (page 104) 3marks

Purchase and consolidation merger (page 110) 5 marks

6 cases given thay or un ka net working pr affect btana tha. (5)

1. financial benifits of merger and acquisition....3 marks

Final Term paper on 4-03-2013 by

Total 60 Questions for 86 Marks. Time 120 Minutes

1. What are the features of forward rate agreement? (3 Marks)

1.using hedge approach , define currency option (3 marks)

OVERSEASE STUDENT 20-JULY-2012 EXAM

MCQ todaly new and difficult

Long question as under

2: Financial destres forward rate agrement EoQ

3: Optimal cash numercial merger transaction

4: Price of bond numerical

others not remember now....

mcqs was all new...........

54 Mcqs question thy

.using hedge approach , define currency option (3 marks)

Dear All Vu Members,

Pls remember me in ur pray

MCQz 80% past, 20% new but easy

Long Questions 75% New

CURRENT 2 PAPERS LONG QUESTIONS

How Firm A can acquire a Private Limited Company

Income Based Approach

Value =CFt/ (1+r) t

Dividend Valuations method:

3. How can we hedge through currency option?

4. Why option is exercised and when allowed to laps

7. Define EOQ Model and its uses

A short cash conversion cycle indicates good working capital management.

Diffrence B/W growth stock and income stock (3 marks)

growth stocks are

2) Described the steps in credit management (3 marks)

2 – Accounts receivable period – the time to recover the sales.

3)steps involved in merger and acquision (5 marks)

4) How a hedge could be established with currency

my today ppr of fin-622 Sad subjective here....

5. Differentiate between the Forward Contract and Currency Future. 5 marks

Fin622 current paper subjective (14/2/2011)

Q: Method of valuation of share in merger & acquisition (5 marks)

Enlist the Anti-Takeover Measure to be taken by a Target Company to resist a

Acquiring Companies often prefer Purchase Mergers to Consolidation Merger. Why?

How a Multinational Firm could reduce Political Risk?

Differentiate Between the Following Variable of a Credit Policy: (5 Marks)

Suppose You Invest Rs 400,000 in Treasury bill and Rs 600,000 in Marketable

The Inventory Manager of a firm has given the following data: 5

Consumption per Period = S = 4000 Units

Economic Order Quantity = EOQ = 80 Units

Lead Time = L = 1 Month

Stock out Acceptance Factor = F = 1.10

Determine the Economic Order Point for the firm

. Suppose a firm is planning to borrow some amount in a short-term period. How

The Inventory Manager of a firm has given the following data: 5