Fundamentals Of Corporate Finance TU Board 2077 question paper

Group A

Brief Answer Questions(10 × 2 = 20)

1. 1.

   Why should the financial manager work together with other functional managers?

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2. 2.

   What do you mean by agency problem between shareholders and creditors?

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3. 3.

   How does the goal of stock price maximization benefit the society?

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4. 4.

   Distinguish between primary market and secondary market.

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5. 5.

   State the major types of financial institution in Nepal.

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6. 6.

   Write the meaning of financial derivatives.

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7. 7.

   Assume 3-month US T-bills have a nominal rate of 8 percent, while default free European bond that mature in 3 months have a nominal rate of 6 percent. In the spot exchange market, one Euro equals $1.15. If interest rate parity holds. What is the 6-month forward exchange rate?

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8. 8.

   Suppose you have purchased a call option of Unilever Limited. Each call option entitles you to purchase one stock of the company at a price of Rs. 1200. The option premium for one call option is Rs.30. The expiration period of the option is 3 month. If the stock price of the company becomes Rs. 1500 at the expiration date. Calculate value of call option.

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9. 9.

   Hari is interested in buying a motor bike. He is applying for Rs. 125,000, 3-year loan. The loan will be fully amortized over the next 3 years. Current interest rate is 12 percent. How much should be paid by Hari for the yearly installment of loan?

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10. 10.

    Dabur Nepal wishes to borrow Rs 100,00 for one year from NBL. The annual interest rate of the loan is 10 percent. The interest is paid on a discount basis and 10 percent compensating.

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