Monday, 25 May 2015

MF0015 - INTERNATIONAL FINANCIAL MANAGEMENT

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ASSIGNMENT


DRIVE
SPRING 2015
PROGRAM
MBADS – (SEM 4/SEM 6) / MBAN2 / MBAFLEX – (SEM 4) /
PGDFMN – (SEM 2)
SUBJECT CODE & NAME
MF0015 - INTERNATIONAL FINANCIAL MANAGEMENT
SEMESTER
4
BK ID
B1759
CREDITS
4
MARKS
60



Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme

1. Discuss the goals of international financial management

Answer:  All businesses aim to maximize their profits, minimize their expenses and maximize their market share. Here is a look at each of these goals.

Maximize Profits A company's most important goal is to make money and keep it. Profit-margin ratios are one way to measure how much money a company squeezes from its total revenue or total sales.




2. In foreign exchange market many types of transactions take place. Discuss the meaning and role of forward, future and options market.
Answer :  A forward contract is a private agreement between two parties giving the buyer an obligation to purchase an asset (and the seller an obligation to sell an asset) at a set price at a future point in time.
The assets often traded in forward contracts





3 Thousands of years back the concept of bartering between parties was prevalent, when the concept of money had not evolved. Explain  counter trade with examples

Answer :  Trading between nations has been happening since time began. In ancient time nations traded silk, spices, cloth and animals of all kinds. Today nation trade food items, defense equipment, metals, electronics etc. The products might have changed but the basic concept is still the same as the underlining need which brings together two nations in a trade relationship still exists.

One such method of trading between nations is called counter trade. Counter trade is an import / export relationship between nations or large companies in which good and/or services are exchanged for goods and services instead of money. In some cases monetary evaluations are made for accounting purposes.



4 There are different techniques of exposure management. One is the Managing Transaction Exposure and the other one is the managing operating exposure So you have to explain on both Managing Transaction Exposure and Managing Operating Exposure.

Answer : ‘Transaction Exposure’ is a risk which is faced by the organizations which are involved in international trade especially when they enter into the financial obligations. The risk which is faced by the companies is about the changes occurring in the currency exchange rates after they have entered into trade obligations in the international market. Many companies which face such a situation adopt hedging strategy which allows them to get locked in an exchange rate by using forward rates to evade the exposure of companies




5. There is a country risk involved every time an MNC operates in a different country. Discuss the two approaches to country risk management.
Answer :  Uncertainty can’t be eliminated from the business environment, but as this author points out, it can be managed by transforming it into planned uncertainty.

Evaluating country risks is a crucial exercise when choosing sites for international business, particularly if investment is to be undertaken. Certain risks can be managed through insurance, hedging and other types of financial planning, but other risks cannot be controlled through such financial mechanisms. Some of these latter risks may



6 Write short note on:

A) American Depository Receipts(ADR)

Answer : An American Depository Receipt, or ADR, is a security issued by a U.S. depository bank to domestic buyers as a substitute for direct ownership of stock in foreign companies. An ADR can represent one or more shares, or a fraction of a share, of a non-U.S. company. Individual shares of a foreign corporation represented by an ADR are called American Depositary Shares (ADSs).



B) Global Depository Receipts(GDR)

Answer : Global Depositary Receipts (GDRs) are negotiable certificates issued by depositary banks which represent ownership of a given number of a company’s shares which can be listed and traded independently from the underlying shares. These instruments are typically used by companies from emerging markets and marketed to professional investors only.

GDRs can be listed on either the Main Market


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MF0013 - INTERNAL AUDIT & CONTROL

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ASSIGNMENT

DRIVE
SPRING 2015
PROGRAM
MBADS – (SEM 3/SEM 5) / MBAN2 / MBAFLEX – (SEM 3) /
PGDFMN – (SEM 1)
SUBJECT CODE & NAME
MF0013 - INTERNAL AUDIT & CONTROL
SEMESTER
3
BK ID
B1733
CREDITS
4
MARKS
60


Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

1 Distinguish between secretarial audit and cost audit. Write the advantages and disadvantages of continuous and periodical audit.

Answer : What is a Secretarial Audit?
As per the "Reference on Secretarial Audit" issued by Institute of Company Secretaries of India (ICSI), a "Secretarial Audit is compliance audit; it is a part of total compliance management in an organisation. The Secretarial Audit is an effective tool for corporate compliance management. It helps ensure timely corrective measures when non-compliance is detected.".

What is the main objective of a Secretarial Audit?
The object of a Secretarial Audit is to provide


2 Write the characteristics of internal check system. Explain the essentials of effective internal auditing.

Answer : Internal Check or internal audit is an arrangement of staff duties whereby no one person is allowed to carry through and record every aspect of transactions so that without collusion between two or more persons, fraud is prevented and at the same time the possibilities of errors is reduced to a minimum.
Internal Check is a system or method introduced with defined instructions given to staff as to their sphere of work with a view to control and verification of their work and also maintenance of accurate records as the ultimate aim.



3 The audit firm follows certain policies and procedures. Explain the quality control  policies adopted by an audit firm.
Answer : To fully appreciate the need for the existence of quality control policies and procedures in an audit firm, students should focus on the assertion that auditing is a commercial activity. As such, in order to achieve the objective of (at least) maintaining the profitability of an audit firm, the audit partners need to:

·         make best use of the resources of the firm;
·         maintain a good level of service and quality of advice to clients;
·         minimise the risk of litigation against the


5 Discuss the specific problems of Electronic Data Processing (EDP) relating to internal control.
Answer : Problems of electronic data processing relating to internal control :

1. Separation of duties :

In a manual system, separate individuals are responsible for initiating transactions, recording transactions, and custody of assets. As a basic control, separation of duties prevents of detects errors and irregularities. In a computer system, however, the traditional notion of separation of duties does not always apply. For example, as program may reconcile a vendor invoice against a receiving document and print a cheque for the amount owed to a creditor. Thus, this program is performing functions that in a manual systems would be considered incompatible.



6 Explain the factors for having the effective internal control system for a bank.
Answer : Factors for having the effective internal control system for a bank :

In the private sector, company directors are responsible for determining policy, monitoring performance and taking corrective action if either policy or its implementation is defective.  Internal control provides a means of assurance that corporate objectives are being achieved.  Thus the directors are responsible for internal control.  In practice, the distinction among these categories and types is often difficult to recognize because an effective internal control structure requires elements of each. Even the descriptions of each category of control can vary among individuals. However, regardless of how internal controls are organized or defined, they should not be thought of as alternatives to each other.
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MF0012 - TAXATION MANAGEMENT

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ASSIGNMENT

DRIVE
SPRING 2015
PROGRAM
MBADS – (SEM 3/SEM 5) / MBAN2 / MBAFLEX – (SEM 3) /
PGDFMN – (SEM 1)
SUBJECT CODE & NAME
MF0012 - TAXATION MANAGEMENT
SEMESTER
3
BK ID
B1760
CREDITS
4
MARKS
60


Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.


Q1.Explain the objectives of tax planning. Discuss the factors to be considered in tax planning.
(Objectives of tax planning 5 marks; Factors in tax planning 5 marks) 10 marks

Answer: Objectives of tax planning :

A. Objective of raising revenue:

 The basic and primary objective of taxation is raising revenue.  Enormous amount needed by modern governments for National defense, creation of infrastructure and social upliftment schemes make regular and systematic resource mobilization compulsory.




Q2.Explain the categories in Capital assets. Mr. C acquired a plot of land on 15th June, 1993 for 10,00,000 and sold it on 5th January, 2010 for 41,00,000. The expenses of transfer were 1,00,000.Mr. C made the following investments on 4th February, 2010 from the proceeds of the plot.
 a) Bonds of Rural Electrification Corporation redeemable after a period of three years, 12,00,000.
b) Deposits under Capital Gain Scheme for purchase of a residential house 8,00,000 (he does not own any house).Compute the capital gain chargeable to tax for the AY2010-11.
(Explanation of categories of capital assets 4 marks ; Calculation of indexed cost of acquisition 2 marks; Calculation of long term capital gain 2 marks; calculation of taxable long term capital gain 2 marks) 10marks

Answer : Categories of capital assets :

1. Collectibles :

Long-term investments in collectibles are taxed at a flat 28%. Short-term investments in collectibles are taxed as short-term capital gains at your ordinary income tax rates. Collectibles include the following items:
  • stamps,



Q3.Explain major considerations in capital structure planning. Write about the dividend policy and factors affecting dividend decisions.
(Explanation of factors of capital structure planning 6 marks; Explanation of dividend policy 2 marks; factors affecting dividend decisions 2 marks) 10marks

Answer :  Factors of capital structure planning :

1. Trading on Equity:

 The word “equity” denotes the ownership of the company. Trading on equity means taking advantage of equity share capital to borrowed funds on reasonable basis. It refers to additional profits that equity shareholders earn because of issuance of debentures and preference shares.

2. Degree of control:




Q4.X Ltd. has Unit C which is not functioning satisfactorily. The following are the details of its fixed assets:

Asset
Date of acquisition
Book value (Rs. lakh )
Land
Goodwill (raised in books on 31st March, 2005)
Machinery
Plant
10th February, 2003


5th April, 1999
12th April, 2004
30
10

40
20

The written down value (WDV) is Rs. 25 lakh for the machinery, and Rs.15 lakh for the plant. The liabilities on this Unit on 31st March, 2011 are Rs.35 lakh.
The following are two options as on 31st March, 2011:
Option 1: Slump sale to Y Ltd for a consideration of 85 lakh.
Option 2: Individual sale of assets as follows: Land Rs.48 lakh, goodwill Rs.20 lakh, machinery Rs.32 lakh, Plant Rs.17 lakh.
The other units derive taxable income and there is no carry forward of loss or depreciation for the company as a whole. Unit C was started on 1st January, 2005. Which option would you choose, and why?
(Computation of capital gain for both the options 4 marks; Computation of tax liability for both the options 4 marks ; Conclusion 2 marks) 10marks

Answer :  Total price of the unit is :

Option 1 :
The net wealth of the undertaking (aggregate value of the total assets of the undertaking minus the value of the
liabilities as appearing in books of accounts) shall be deemed to be the cost of acquisition and the cost of improvement for the




Q5.Explain the Service Tax Law in India and concept of negative list. Write about the exemptions and rebates in Service Tax Law.
(Explanation of Service Tax Law in India 5 marks; explanation of concept of negative list 2marks; Explanation of exemptions and rebates in Service Tax Law 3 marks) 10marks

Answer : Service tax laws in India :

 Generally, the liability to pay service tax has been placed on the ‘service provider’. However, in respect of the taxable services notified under Sec.68(2) of the Finance Act,1994, the service tax shall be paid by such person and in such manner as may be prescribed at the rate specified in Sec.66 of the Act and all the provisions of Chapter-V shall apply to such person as if he is the person liable for paying the service tax.
The following services have been notified under Sec.68(2) of Finance Act,1994:
 the services,-
(i)         in relation to telecommunication service


Q6.What do you understand by customs duty? Explain the taxable events for imported, warehoused and exported goods. List down the types of duties in customs. An importer imports goods for subsequent sale in India at $10,000 on assessable value basis. Relevant exchange rate and rate of duty are as follows:

Particulars
Date
Exchange Rate Declared by CBE&C
Rate of Basic Customs Duty
Date of submission of bill of entry

25th February, 2010

Rs.45/$

8%



Date of entry inwards granted to the vessel
5th March, 2010
Rs.49/$
10%

Calculate assessable value and customs duty.
(Meaning and explanation of customs duty 2 marks; Explanation of taxable events for imported, warehoused and exported goods 3 marks; Listing of duties in customs 2 marks; Calculation of assessable value and customs duty 3marks) 10marks

Answer : Custom duty :

A customs duty is a tariff or tax on the importation (usually) or exportation (unusually) of goods. In the Kingdom of England, customs duties were typically part of the customary revenue of the king, and therefore did not need parliamentary consent to be levied, unlike excise duty, land tax, or other forms of taxes. Commercial goods not yet cleared through customs are held in a customs area, often called a bonded store, until processed. All
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MF0011 - MERGERS & ACQUISITIONS

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ASSIGNMENT

DRIVE
SPRING 2015
PROGRAM
MBADS – (SEM 3/SEM 5) / MBAN2 / MBAFLEX – (SEM 3) /
PGDFMN – (SEM 1)
SUBJECT CODE & NAME
MF0011 - MERGERS & ACQUISITIONS
SEMESTER
3
BK ID
B1732
CREDITS
4
MARKS
60


Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

1 Explain the five stage model of mergers and acquisitions.
Answer : The five stages of merger and acquisition process under 5-S model can be divided as below:

Stage 1: Corporate strategy development:

Corporate strategy is concerned with the ways of optimizing the portfolios of businesses that a firm currently owns and with how this portfolio can be changed to serve the interests of the corporation’s stake holders. Merger and acquisition can serve the objectives of both corporate and business strategies despite their being the

2 What do you understand by demerger? Write about the tax implications of demergers.
Explain the characteristics of demerger.

Answer: Introduction of demerger :
A demerger is a form of corporate restructuring in which the entity's business operations are segregated into one or more components. It is the converse of a merger or acquisition.
A demerger can take place through a spin-off by distributed or transferring the shares in a subsidiary holding the business to company shareholders carrying out the demerger. The demerger can also occur by transferring the relevant business to a new company or business to which then that company's shareholders are issued shares of.


3 Explain about Employee Stock Ownership Plans (ESOP). Write down about the rules of ESOP and types of ESOPS.
Answer : Introduction of ESOP :

An employee stock ownership plan (ESOP) is an employee-owner scheme that provides a company's workforce with an ownership interest in the company. In an ESOP, companies provide their employees with stock ownership, often at no up-front cost to the employees. ESOP shares, however, are part of employees' compensation for work performed. Shares are allocated to employees and may be held in an ESOP trust until the employee retires or leaves the company. The shares are then sold.

Key rules of ESOP :



4 Write Short notes on :
a. Exchange rates
Answer : Exchange rates :

In finance, an exchange rate (also known as a foreign-exchange rate, forex rate, FX rate or Agio) between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency. For example, an interbank exchange rate of 91 Japanese yen (JPY, ¥) to the United States dollar (US$) means that ¥91 will be exchanged for each US$1 or that US$1 will



5 Give the meaning of buyback of shares. Explain the objectives and guidelines for buyback of shares.
Answer : Objectives for buyback of shares:

 Stock Price Undervalued
A company's management team may decide to buy back shares for several reasons. One is the view that the shares are undervalued. An overall underperforming stock market or a company that has been hit with a scandal can signal to investors that the share price is worth more by purchasing its own stock. Investors often see this as a positive indicator to buy stock as well.

An extreme example of this was post-"Black


6 Explain the methods of accounting of amalgamation with example.
Answer : Purpose and Scope: This statement deals with accounting for amalgamations and the treatment of any resultant goodwill or reserves. It does not deal with acquisition by one company of the whole or part of the shares, or the whole or part of the assets, of another company in consideration for payment in cash or by issue of shares or other securities in the acquiring company or partly in one form and partly in the other.

Pooling of interests method

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MF0010 & SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

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ASSIGNMENT

DRIVE
SPRING 2015
PROGRAM
MBADS – (SEM 3/SEM 5) / MBAN2 / MBAFLEX – (SEM 3) /
PGDFMN – (SEM 1)
SUBJECT CODE & NAME
MF0010 & SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
SEMESTER
3
BK ID
B 1754
CREDITS
4
MARKS
60


Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.



Q1. Describe the investment process.

Answer :  Every investor should have a process. This applies whether or not they are value investors. An investment process helps keep investors focussed and on track, and prevents the investor from going off the rails emotionally when making investment decisions. Emotional investment decisions are bad for returns and can really ruin a portfolio as you will more often than not find yourself buying and selling stocks at the worst possible time – buying when the price is high and selling when the price is low rather than vice versa. With a clear investment process that you consult at every buy/sell decision, you go through each


Q2.Write about the secondary markets? Explain the role of financial intermediaries.
Answer :  The secondary market, also called aftermarket, is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold.[1] Another frequent usage of "secondary market" is to refer to loans which are sold by a mortgage bank to investors such as Fannie Mae and Freddie Mac.

The term "secondary market" is also used to refer to the market for any used goods or assets, or an alternative use for an existing product or asset where the customer base is the second market (for example, corn has been traditionally used primarily for food production and feedstock, but a "second" or "third" market has developed for use


Q3.Explain the meaning of risk. Describe what are the factors that affect risk

Answer : Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome). The notion implies that a choice having an influence on the outcome sometimes exists (or existed). Potential losses themselves may also be called "risks". Any human endeavour carries some risk, but some are much more risky than others.




Q4.Briefly explain the variables that are analyzed in economy analysis.

Answer : Economic analysis
Real activity and financial conditions
The economic analysis assesses the short to medium-term determinants of price developments. The focus is on real activity and financial conditions in the economy. The economic analysis takes account of the fact that price developments over those horizons are influenced largely by the interplay of supply and demand in the goods, services and factor markets.

To do so, the ECB regularly reviews, inter alia,

·         developments in overall output,



Q5.Explain about technical indicators and How are they used?
Answer : The central idea behind technical analysis is that past price actions can help predict future price behaviour. This is why chart patterns, candlestick formations, and other technical indicators are used to determine whether an uptrend or downtrend is due. And since most traders play by these technical ideas, their price behaviour forecasts tend to be self-fulfilling.

This article is designed to introduce the concept of technical indicators and explain how to use them in your analysis. We will shed light on the difference between leading and lagging indicators, as well as look into the benefits and drawbacks. Many,



6 Explain the assumptions of Capital Asset Pricing Model (CAPM). Give a short note on Separation Theorem, Capital Market Line(CML) and Security Market Line (SML)

Answer : Meaning and definition of Capital Asset Pricing Model

The Capital Asset Pricing Model (CAPM) refers to a model that delineates the relationship between risk and expected return and what is used in the pricing of risky securities. The concept is used for pricing an individual portfolio or security. The basic idea underlying the concept is that investors are required to be compensated in two ways –
·         Time value of money

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