Year: 2024
Unit I: Introduction to Finance & Corporate Finance
Section A, 1(a): What is the role of financial markets in economic development?

Section A, 1(f): Give two example of how Indian financial markets are influenced by global markets.

Section B, 2(a): Compare and contrast the money market and capital market with suitable examples.

Section C, 3(a): Discuss the role of a finance manager in a company. How does he/she apply corporate finance concepts?

Section C, 3(b): Discuss how macroeconomic indicators such as GDP, inflation, and interest rates impact financial markets.

Unit II: Investment and Financing Decision
Section A, 1(b): Why is opportunity cost important in decision-making?

Section A, 1(g): Name any two capital budgeting techniques.

Section B, 2(b): Discuss the components of a cash flow statement and explain their significance in financial analysis.

Section C, 4(a): What are the major considerations involved in making capital investment decisions?

Section C, 4(b): Explain the need for incorporating risk analysis in long-term investment decisions.

Unit III: Financial Decision (Leverage & Capital Structure)
Section A, 1(c): What is the point of indifference in financial management?

Section C, 5(a): Explain how financial leverage affects EPS under different levels of EBIT.

Section C, 5(b): Discuss how a firm can use leverage to enhance shareholders' earnings. What are the associated risks?

Unit IV: Dividend Relevance
Section A, 1(d): How is cash dividend different from stock dividend?

Section B, 2(c): How do dividend decisions impact the market price of shares under relevance theory?

Section B, 2(d): Discuss various dividend policies followed by companies. How do they impact investor perception?

Section C, 6(a): How does Bird-in-Hand theory influence investor behavior toward dividend-paying stocks?

Section C, 6(b): How do Walter and Gordon justify that dividend decisions affect the value of a firm? Explain.

Unit V: Working Capital Management
Section A, 1(e): What is the principle of matching maturity in working capital management?

Section B, 2(e): Explain the impact of working capital management principles on the financial health of a business.

Section C, 7(a): How does the length of the working capital cycle affect business operations and profitability?

Section C, 7(b): What are the factors a firm must consider before designing an effective credit policy?

Year: 2023
Unit I: Introduction to Finance & Corporate Finance
Section A, 1(a): Define CAPM model.

Section A, 1(b): Explain Doubling period Rule of 69.

Section A, 1(i): Define a de-merger.

Section A, 1(j): What is meant by financial synergy in a merger?

Section B, 2(a): “Without adequate finance no business can survive and without efficient financial management no business can prosper and grow.” Comment on this statement outlining the role and scope of financial management.

Section B, 2(e): Explain the concept of the exchange ratio in the context of mergers. Discuss how the exchange ratio is determined and its significance for the shareholders of the merging companies.

Section C, 3(a): Compare and contrast the asset-based valuation model, earning-based valuation model, and cash flow-based valuation model. Discuss the advantages and disadvantages of each model.

Section C, 3(b): From the following information, by using CAPM model calculate the expected rate of return of a portfolio:

Risk Free rate of interest 12%

Expected return of market portfolio 18%

Standard deviation of an asset 2.8%

Market standard deviation 2.3%

Co-relation co-efficient of portfolio with market 0.8%

Section C, 7(a): Define mergers and acquisitions (M&A) and explain their importance in the corporate world. Discuss the different types of mergers and acquisitions.

Section C, 7(b): A Ltd wants to acquire B Ltd and has offered a swap ratio of 1:2 shares. [Numerical calculation of Shares issued, EPS, and Value after acquisition].

Unit II: Investment and Financing Decision
Section A, 1(c): What does a positive NPV indicate about a project?

Section A, 1(d): Define opportunity cost in the context of financial decision-making.

Section B, 2(b): Define the composite cost of capital. Describe the steps involved in calculating the WACC for a company. Why is WACC important for a firm’s investment decisions? Provide a numerical example to illustrate the calculation.

Section C, 4(a): Describe the Net Present Value (NPV) and Internal Rate of Return (IRR) methods of project evaluation. How are these methods calculated, and what are their respective advantages and disadvantages?

Section C, 4(b): A Ltd. Company Ltd. is considering the purchase of a machine. [Numerical comparison of Machine X and Y using NPV method at 10% discount rate].

Unit III: Financial Decision (Leverage & Capital Structure)
Section A, 1(e): Explain the significance of financial leverage.

Section A, 1(f): Explain point of Indifference.

Section B, 2(c): A Ltd. has sales of Rs. 20,00,000... [Numerical calculation of Operating, Financial, and Combined leverages and sales rise needed to double EBIT].

Section C, 5(a): Define capital structure and explain its importance in financial decision-making. Discuss the factors that influence a company’s choice of capital structure.

Section C, 5(b): Define financial leverage, operating leverage, and combined leverage. Explain how each type of leverage affects a company’s financial performance and risk profile.

Unit IV: Dividend Relevance
Section A, 1(g): Discuss retention ratio.

Section A, 1(h): Classify types of dividend policy.

Section B, 2(d): The earnings per share of a company are Rs. 8... [Numerical calculation using Walter’s formula for 25% and 50% payout ratios].

Section C, 6(a): Discuss the Determinants of Dividend Policy.

Section C, 6(b): A company belongs to a risk class... [Numerical proof using MM approach that dividend payment does not affect the value of equity shares].

Year: 2022
Unit I: Introduction to Finance & Corporate Finance
Section A, 1(a): What is meant by Asset Based Valuation Model?

Section A, 1(b): Define Arbitrage Pricing Theory.

Section A, 1(i): What is Acquisition?

Section A, 1(j): Define De-Merger.

Section B, 2(a): What is Capital Asset Pricing Model? Also discuss its assumptions.

Section B, 2(e): What is Synergy in merger and acquisition? Also discuss the synergy Benefits.

Section C, 3(a): Discuss the Corporate Valuation Model in Business Management.

Section C, 3(b): What is Finance Function? Explain in brief the different approaches (concepts) to finance functions.

Section C, 7(a): What are the reasons of merger? Also discuss its types.

Section C, 7(b): What are the issues in mergers? Discuss the problems in Acquisition.

Unit II: Investment and Financing Decision
Section A, 1(c): What is meant by Composite Cost of Capital?

Section A, 1(d): [Numerical] The average rate of dividend paid by Veer Co. Ltd. for the last five year is 21 Percent. The earnings of the company have recorded a growth rate of 3 percent per annum. The market value of the equity share is estimated to be Rs. 105. Find out the cost of equity share capital.

Section B, 2(b): [Numerical] A project cost Rs. 96,000 and is expected to generate cash inflows of Rs. 48,000, Rs. 42,000 and Rs. 36,000 at the end of each year for next 3 years. Calculate project's IRR.

Section C, 4(a): [Numerical] A project will cost Rs. 4,00,000. Its stream of earnings before depreciation, interest and taxes (EBDIT) during first year through five years is expected to be Rs. 1,00,000, Rs. 1,20,000, Rs. 1,40,000, Rs. 1,60,000 and Rs. 2,00,000. Assume a 30% tax rate and depreciation on straight-line basis. Calculate the project's accounting rate of return.

Section C, 4(b): [Numerical] XYZ Ltd. issued 2,000 10% Preference Share of Rs. 200 each. Cost of issue is Rs. 3 per share. Calculate cost of preference capital if these shares are issued: (1) at par (2) at premium and (3) at 2% discount. Also calculate cost of preference shares after tax in the above situations, if corporate dividend tax is 10%.

Unit III: Financial Decision (Leverage & Capital Structure)
Section A, 1(e): [Numerical] A company has estimated that for a new product its selling price is Rs. 15 per unit, variable cost is Rs. 10 per unit and fixed cost is Rs. 10,000. Calculate the operating leverage for sales volume of 5,000 units.

Section A, 1(f): What is Indifference Point? How is it determined?

Section B, 2(c): What is meant by Capital Structure? Also discuss the Relevance Theory of Capital Structure.

Section C, 5(a): [Numerical] A company needs Rs. 10, 00,000 for the installation of a new factory... [Calculation of EPS and suggesting the best alternative between Debt and Equity].

Section C, 5(b): [Numerical] A company has sales of Rs. 1 Lakh. The variable costs are 40% of the sales while the fixed operating costs amount to Rs. 30,000. The amount of interest on long-term debt is Rs. 10,000. You are required to calculate the Operating, Financial and Composite leverages and illustrate its impact if sales increased by 5%.

Unit IV: Dividend Relevance
Section A, 1(g): Define Interim Dividend.

Section A, 1(h): What is meant by Conservative Dividend Policy?

Section B, 2(d): [Numerical] Details regarding three companies are given below (U Ltd, V Ltd, W Ltd)... By using Walter's Model, calculate the value of an equity share for different dividend payout ratios (20%, 50%, 0% and 100%).

Section C, 6(a): [Numerical] Determine the value of share by using Gordon's Model assuming the D/p Ratios (100, 80, 40) and Retention Ratios (0, 20, 60).

Section C, 6(b): What is Irrelevant Concept of Dividend? Discuss its assumptions and limitations too.

Year 2021:
Unit I: Introduction to Finance & Corporate Finance
Section A, Q1(a): What is Financial Management?

Section A, Q1(b): What is meant by Time Value of Money?

Section A, Q1(i): What do you mean by Mergers?

Section A, Q1(j): What is meant by Acquisition?

Section C, Q3(a): What is Capital Asset Pricing Model? Discuss the Assumptions and Limitations of Capital Asset Pricing Model.

Section C, Q3(b): Discuss the Financial Decisions and Objectives of Financial Management.

Section C, Q7(a): Write a short notes on:- (I). Exchange Ratio (II). Synergy Benefits (III). Post Merger EPS (IV). De-Merger.

Section C, Q7(b): What challenges are faced with a merger or acquisition? Discuss.

Unit II: Investment and Financing Decision
Section A, Q1(c): Define Profitability Index. How is it calculated?

Section A, Q1(d): [Numerical] A project requires an outlay of Rs. 50,000 and yields annual cash inflow of Rs. 12,500 for 7 years. Calculate the payback period for the project. And also tell whether this project will be accepted or not and why?

Section B, Q2(a) (ii): [Numerical] Triple ‘V’ Ltd. issued 1,000 10% Preference Shares of Rs. 100 each. Cost of issue is Rs. 2 per share. Calculate cost of preference capital if these shares are issued: (I). at par (II). at 5% premium and (III). at 2% discount. Also calculate cost of preference shares after tax in the above situations, if corporate dividend tax is 10%.

Section B, Q2(b) (ii): [Numerical] A project costs Rs. 16,000 and is expected to generate cash inflows of Rs. 8,000, Rs. 7,000 and Rs. 6,000 at the end of each year for next 3 years. Calculate IRR by Trial and Error Method.

Section C, Q4(a): [Numerical] The average rate of dividend paid by ‘V’ Ltd. for the last five years is 21%. The earnings of the company have recorded a growth rate of 3% per annum. The market value of the equity shares is estimated to be Rs. 105. Find out: (I). The cost of equity share capital. (II). Determine the estimated market price of the equity shares if the anticipated growth rate of the firm rises to 5%. (III). If the company’s cost of capital is 20% and anticipated growth rate is 5%, determine the market price of the share, assuming the same dividend per share.

Section C, Q4(b): [Numerical] A project will cost Rs. 40,000. Its stream of earnings before depreciation, interest and taxes (EBDIT) during first year through five years is expected to be Rs. 10,000, Rs. 12,000, Rs. 14,000, Rs. 16,000 and Rs. 20,000. Assume a 50% tax rate and depreciation on straight line basis. Calculate project’s ARR.

Unit III: Financial Decision (Leverage & Capital Structure)
Section A, Q1(e): What is Indifference Point? How is it determined?

Section A, Q1(f): [Numerical] A company has estimated that for a new product its selling price is Rs. 14 per unit, variable cost is Rs. 9 per unit and fixed cost is Rs. 10,000. Calculate the Operating Leverage for sales volumes of 3000 units.

Section B, Q2(a) (i): [Numerical] The capital structure of “VEER” Ltd. is as follows... [Debentures, Pref. Shares, Equity Shares total 20 Lakhs]. The company is considering an expansion... [Comparison of 14% Debentures, 6% Pref. Shares, and Equity Shares to suggest the best alternative].

Section C, Q5(a): What do you mean by Capital Structure? Explain the Theories of Capital Structure in brief.

Section C, Q5(b): [Numerical] “BHARAT” Ltd. has sales of Rs. 25,00,000. The fixed costs are Rs. 4,00,000 and variable costs are Rs. 17,00,000. The company uses a debt of Rs. 10,00,000 @ 12% p.a. From the available data, calculate the operating, financial and combined leverages.

Unit IV: Dividend Relevance
Section A, Q1(g): What is meant by Interim Dividend?

Section A, Q1(h): Define Conservative Dividend Policy.

Section B, Q2(b) (i): [Numerical] The earnings per share of a company are Rs. 16. The market value of discount (Capitalisation rate) to the company is 12.5%. Retained earnings can be employed to yield a return of 10%. The company is considering a payout of 25%, 50% and 75%. Which of these would maximize the wealth of shareholders?

Section C, Q6(a): Discuss M-M Hypothesis Dividend Model.

Section C, Q6(b): [Numerical] Radhe Engineering Co. Ltd. currently has outstanding 1,00,000 shares selling at Rs. 100 each... [MM Approach numerical to show that dividend payment does not affect the wealth of shareholders].

Year 2018:
Unit I: Introduction to Finance & Corporate Finance
Section A, Q1(a): What is Financial Management?

Section A, Q1(b): What is meant by Time Value of Money?

Section A, Q1(i): What do you mean by Mergers?

Section A, Q1(j): What is meant by Acquisition?

Section C, Q3(a): What is Capital Asset Pricing Model? Discuss the Assumptions and Limitations of Capital Asset Pricing Model.

Section C, Q3(b): Discuss the Financial Decisions and Objectives of Financial Management.

Section C, Q7(a): Write a short notes on:- (I). Exchange Ratio (II). Synergy Benefits (III). Post Merger EPS (IV). De-Merger.

Section C, Q7(b): What challenges are faced with a merger or acquisition? Discuss.

Unit II: Investment and Financing Decision
Section A, Q1(c): Define Profitability Index. How is it calculated?

Section A, Q1(d): [Numerical] A project requires an outlay of Rs. 50,000 and yields annual cash inflow of Rs. 12,500 for 7 years. Calculate the payback period for the project. And also tell whether this project will be accepted or not and why?

Section B, Q2(a) (ii): [Numerical] Triple ‘V’ Ltd. issued 1,000 10% Preference Shares of Rs. 100 each. Cost of issue is Rs. 2 per share. Calculate cost of preference capital if these shares are issued: (I). at par (II). at 5% premium and (III). at 2% discount. Also calculate cost of preference shares after tax in the above situations, if corporate dividend tax is 10%.

Section B, Q2(b) (ii): [Numerical] A project costs Rs. 16,000 and is expected to generate cash inflows of Rs. 8,000, Rs. 7,000 and Rs. 6,000 at the end of each year for next 3 years. Calculate IRR by Trial and Error Method.

Section C, Q4(a): [Numerical] The average rate of dividend paid by ‘V’ Ltd. for the last five years is 21%. The earnings of the company have recorded a growth rate of 3% per annum. The market value of the equity shares is estimated to be Rs. 105. Find out: (I). The cost of equity share capital. (II). Determine the estimated market price of the equity shares if the anticipated growth rate of the firm rises to 5%. (III). If the company’s cost of capital is 20% and anticipated growth rate is 5%, determine the market price of the share, assuming the same dividend per share.

Section C, Q4(b): [Numerical] A project will cost Rs. 40,000. Its stream of earnings before depreciation, interest and taxes (EBDIT) during first year through five years is expected to be Rs. 10,000, Rs. 12,000, Rs. 14,000, Rs. 16,000 and Rs. 20,000. Assume a 50% tax rate and depreciation on straight line basis. Calculate project’s ARR.

Unit III: Financial Decision (Leverage & Capital Structure)
Section A, Q1(e): What is Indifference Point? How is it determined?

Section A, Q1(f): [Numerical] A company has estimated that for a new product its selling price is Rs. 14 per unit, variable cost is Rs. 9 per unit and fixed cost is Rs. 10,000. Calculate the Operating Leverage for sales volumes of 3000 units.

Section B, Q2(a) (i): [Numerical] The capital structure of “VEER” Ltd. is as follows... [Debentures, Pref. Shares, Equity Shares total 20 Lakhs]. The company is considering an expansion... [Comparison of 14% Debentures, 6% Pref. Shares, and Equity Shares to suggest the best alternative].

Section C, Q5(a): What do you mean by Capital Structure? Explain the Theories of Capital Structure in brief.

Section C, Q5(b): [Numerical] “BHARAT” Ltd. has sales of Rs. 25,00,000. The fixed costs are Rs. 4,00,000 and variable costs are Rs. 17,00,000. The company uses a debt of Rs. 10,00,000 @ 12% p.a. From the available data, calculate the operating, financial and combined leverages.

Unit IV: Dividend Relevance
Section A, Q1(g): What is meant by Interim Dividend?

Section A, Q1(h): Define Conservative Dividend Policy.

Section B, Q2(b) (i): [Numerical] The earnings per share of a company are Rs. 16. The market value of discount (Capitalisation rate) to the company is 12.5%. Retained earnings can be employed to yield a return of 10%. The company is considering a payout of 25%, 50% and 75%. Which of these would maximize the wealth of shareholders?

Section C, Q6(a): Discuss M-M Hypothesis Dividend Model.

Section C, Q6(b): [Numerical] Radhe Engineering Co. Ltd. currently has outstanding 1,00,000 shares selling at Rs. 100 each... [MM Approach numerical to show that dividend payment does not affect the wealth of shareholders].

Year 2017:
Unit I: Introduction to Finance & Corporate Finance
Section A, 1(a): What is corporate financial management?

Section A, 1(b): What is time value of money?

Section B, 2(a): “Finance is the life blood of Industry.” Elucidate this statement with suitable examples.

Section C, 3(b): What are the basic financial decisions? How do they involve risk-return trade-off?

Section C, 7(a): Discuss the various financial instruments in the Indian financial system.

Section C, 7(b): Write a short notes on: (i) Venture Capital, and (ii) Introduction to derivatives.

Unit II: Investment and Financing Decision
Section A, 1(c): What is profitability index?

Section A, 1(d): [Numerical] A project requires an outlay of Rs. 1,00,000 and yields annual cash inflow of Rs. 25,000 for 7 years. Calculate the payback period for the given project.

Section B, 2(b): “Equity Capital has also a cost.” Explaining it discuss the various methods of measuring the cost of equity capital.

Section C, 3(a): [Numerical] The following table gives dividend and share price data for ‘VEER’ manufacturing Company... [Calculation of Annual rates of return, Expected average rate, Variance, and Standard deviation].

Section C, 4(a): [Numerical] A project costs Rs. 15,500 and is expected to generate cash inflows of Rs. 8000, Rs. 7000 and Rs. 6000 at the end of each year for next 3 years. Find out the project's IRR by trial and error method.

Section C, 4(b): [Numerical] A company issued 10,000 ten-years 8% debentures of Rs. 100 each at 4% discount... [Redeemed at 5% premium, tax rate 50%]. Calculate the cost of debt capital before and after tax.

Unit III: Financial Decision (Leverage & Capital Structure)
Section A, 1(e): What is point of indifference?

Section A, 1(f): [Numerical] A company has estimated that for a new product its selling price is Rs. 15 per unit, variable cost is Rs. 10 per unit and fixed cost is Rs. 10,000. Calculate the operating leverage for sales volume of 5000 units.

Section B, 2(c): “The basic problem in financing an enterprise is to maintain a sound capital structure.” Examine this statement and suggest the factors you would bear in mind while planning capital structure.

Section C, 5(a): [Numerical] The present capitalisation of a company is as follows... [Comparison of 5% Debentures vs 8% Preference Shares vs Equity Shares for a 2 Lakh expansion].

Section C, 5(b): [Numerical] A Company has sales of Rs. 1 lakh. The variable costs are 40%... [Calculation of Operating, Financial and Composite leverages and impact if sales increased by 5%].

Unit IV: Dividend Relevance
Section A, 1(g): What are essentials of a sound dividend policy?

Section A, 1(h): What is meant by stock dividend?

Section B, 2(d): What considerations are kept in view while deciding the dividend policy of a company? Explain.

Section C, 6(a): Discuss the ‘Walter’s Approach’ with formula and various assumptions of the relevance concept of dividend.

Section C, 6(b): [Numerical] XYZ Company currently has outstanding 2,00,000 shares selling at Rs. 200 each... [MM Approach numerical showing dividend payment doesn't affect wealth].

Unit V: Working Capital Management
Section B, 2(e): What is meant by financial system? Discuss the main components of the Indian financial system. (Note: Unit 5 theory is missing in this paper's major sections, similar to 2021-23).

Year 2016: