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1. Dear students get fully solved assignments
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INDIAN SCHOOL OF BUSINESS
MANAGEMENT & ADMINISTRATION
AN ISO 9001 : 2008 CERTIFIED INSTITUTION
SUBJECT:- CORPORATE FINANCE MANAGEMENT
COURSE: CFM Total Marks: 80
N.B.: 1) Attempt any Twenty Questions
2) All questions carries equal marks.
Q.1) Give A brief On Optimizing the Corporate Finance Function, The ExternalBusiness
Environment and Corporate Financial Strategy.The Strategic Logic of High Growth?
Answer:Optimizingthe Corporate Finance Function:Considering the demands on finance functions
and current opportunities for improvement, this may be the best time for insurers to revisit their
finance operatingmodelsandbetterprepare theiroperationsforcurrentandfuture demands.Many
insurance companies are taking a closer look at their business strategy, and many of them have
made or are contemplating
Q.2) Explain what is Shareholder Value Maximization?
Answer:a) Corporate Valuation:Corporate valuation is a process and a set of procedures used to
estimate the economic value of an owner’s interest in a business. Valuation is used by financial
market participants to determine the price they are willing to pay or receive to affect a sale of a
business.Inadditiontoestimatingthe sellingprice of abusiness,the same valuation tools are often
used by business appraisers to resolve

2. Q.3) Explain Financial Policy with the help of the following points?
Answer:The primary aim of the financial policy is to ensure that all financial transactions comply
withthe company’srequirementsregardinginternal control,financialliability and the management
of financial risks, as well as comply with all legal and financial requirements.
 Capital Structure:For stockinvestorsthatfavorcompanieswithgoodfundamentals,astrong
balance sheetisanimportantconsiderationforinvestingin a company's stock. The strength
of a company' balance sheet can be evaluated by three broad categories of investment-
qualitymeasurements: working capital adequacy, asset performance and capital structure.
 Operating Leverage: Using a measure of
Q.4) Give an introduction to Risk Management include the following?
Answer:Riskmanagementisthe identification, assessment,andprioritizationof risks(defined in ISO
31000 as the effect of uncertainty on objectives) followed by coordinated and economical
application of resources to minimize, monitor, and control the probability and/or impact of
unfortunate events ortomaximize the realizationof opportunities. Risk management’s objective is
to assure uncertainty does not deviate the
Q.5) what is Financial Reporting, Planning and Control
Answer:a) Financial Reporting: GAAP Convergence:The international convergence of accounting
standards refers to the goal of establishing a single set of high-quality accounting standards to be
usedinternationally,andthe effortsof standard-setterstowardsachievingthatgoal. Convergence is
taking place in various countries, with over 100 countries having made public commitments
supporting convergence towards the International Financial Reporting Standards (IFRS).Efforts
towardsconvergence includeprojectsthataimtoimprove the respective accounting standards, and
those that aim to reduce the differences
Q.6) Corporate Performance Management: The Balancing act?
Answer:Business performance management is a set of management and analytic processes that
enables the management of an organization's performance to achieve one or more pre-selected
goals. Synonyms for "business performance management" include "corporate performance
management (CPM)" and "enterprise performance management"
a) The Execution Problem:This means that the

3. Q.7) How do we create and measure shareholder value creation?
Answer:When an investment or a commitment is made in the form of money, effort or time, a
certain degree of utility or benefit is demanded. There is value creation when the actual utility is
greaterthan the utilitythatwasdemanded,andthere isvalue erosionwhenthe actual utility is less.
There is a wide variety of equity investment opportunities available to an investor, ranging from
infrastructure to consumer goods and from
Q.8) How do we manage financial risk?
Answer:Financial investing is a common way businesses and individuals generate passive income
streams. Investing money can be done through a wide variety of investment instruments. Stocks,
bonds,derivatives,mutual funds, money markets and other items are just a few types of available
investments.All investmentsinvolve some type of risk,albeitcertaininvestments are less risky than
others.Properly managing risk can ensure businesses and individuals generate income and do not
lose their capital on unwise choices.
Q.9) In what projects are we going to invest our shareholders money (capex)?
Answer:Capital expenditure,or CapEx, are funds used by a company to acquire or upgrade physical
assetssuchas property,industrial buildingsorequipment. Itisoftenusedtoundertake new projects
or investments by the firm. This type of outlay is also made by companies to maintain or increase
the scope of their operations. These expenditures can include everything from repairing a roof to
building, to purchasing a piece of a equipment, or building a brand new factory.
In terms of accounting, an expense is considered to
Q.10) Why Profit maximization is not the same as shareholder wealth maximization?
Answer:The objective of financial managementis profitmaximisation.Itcannotbe the sole objective
of a companyas there isa directs/relationshipbetween risk and profit. If profit maximisation is the
only goal, then risk factories ignored.
Sometimes,higherthe risk,higheristhe possibilityof profits.Hence,riskhastobe balancedwiththe
objective of profit maximisation. In addition, a firm has to take into account the social
considerations,andnormal obligationstothe interestsof workers,consumers,society,government,
as well as ethical trade practices. However, as profit

4. Q.11) What investments should we make?
Answer:Investing is all about buying things that put money back into your pocket. It may sound
scary, but if you have a bank term deposit or are in KiwiSaver – you’re an investor.
You become an investor when you put your money into things that can earn income or grow in
value.The general aimistoearn at leastan after-tax return greater than the rate of inflation. Being
an investor also involves a degree of risk. Generally, the higher the
Q.12) How do you know whether an investment generates value for shareholders?
Answer:Your business is an asset and, as such, has inherent value. Determining what that value is,
and more importantly,howtoincrease thatvalue,are keyaspectsof financial management that are
too often ignored. Most business owners look first at the P&L, or how much money they “pulled
out”,and the balance sheetsecond. Few look at their shareholder value and know how much their
businessisworth. Whatisinterestingisthatalmostall,however,will be able to tell you the current
value of their real estate or stock portfolio. Conceptually, most people understand “shareholder
value”. Implementing the principle and using the
Q.13) Described Traditional appraisal techniques?
Answer:Whatbusinessesactually use: Each method of performance appraisal has its strengths and
weaknessesmaybe suitable forone organisationandnon-suitable foranotherone.Assuch, there is
no single appraisal method accepted and used by all organisations to measure their employees’
perfor-mance.
All the methods of appraisal devised so far have been classified differently by different authors.
While traditional methods lay emphasis on the
Q.14) Explain The managerial art of investment selection
Answer:Building and managing an investment portfolio is a bit like building a piece of furniture. If
youare creatingsomethingextremelysimple,youdon’tneedmore thanasmall setof basic-purpose
tools.Constructingsomethingbettercallsforselecting the right wood, the right tools, and the right
technique.Similarly,buildingthe bestportfolioscallsforselectingthe best investment vehicles.The
single most important aspect of selecting a money manager is the Investment Selection Process.
WWK’s Investment Selection Process

5. Q.15) Explain The stages of investment decisions ?
Answer:Where corporate investing is concerned, there are basically four phases that include a
planningphase,anevaluationof the project or capital, a way for status to be monitored, and a post
completionreportorreviewprocess.Toevaluate a capital investment project, each phase must be
addressed.Forexample, an analysis must be done on the strategies being utilized or proposed for
funding and financing. Capital expenditures are estimated according to whether they are major
projects or minor projects, as well as future capital investment needs proposed.
Q.16) Explain Allowing for risk
Answer:What is risk?:Risk is the potential of losing something of value. Values (such as physical
health,social status,emotional well beingorfinancial wealth)canbe gained or lost when taking risk
resulting from a given action, activity and/or inaction, foreseen or unforeseen. Risk can also be
defined as the intentional interaction with uncertainty. Uncertainty is a potential, unpredictable,
unmeasurable and uncontrollable outcome, risk is a consequence of action taken in spite of
uncertainty.
Adjusting for risk through the discount rate: An esti
Q.17) Explain Value managed companies versus earnings managed companies
Answer:The value of a companyisdeterminedbyits discounted future cash flows. Value is created
only when companies invest capital at returns that exceed the cost of that capital. VBMextends
these conceptsbyfocusingonhowcompaniesuse themtomake both major strategic and everyday
operating decisions. Properly executed, it is an approach to management that aligns a company's
overall aspirations, analytical techniques, and management processes to focus management
decisionmakingonthe keydriversof value. While onthe other hand the earnings management is a
strategyusedbythe managementof acompanyto deliberatelymanipulate the company's earnings
so that the figures match a pre-determined target
Q.18 ) Explain Strategic position
Answer:
 Strategic business unit management:A strategic business unit is a fully functional and
distinct unit of the business that develops their own strategic vision and direction. Within
large companiesthere are smaller specialized divisions that work towards specific projects
and goals,andwe see thisorganizational setupfrequentlyinglobal companies.The strategic
businessunit,oftenreferredtoasan SBU, remainsan importantcomponentof the company
and must report back through

6. Q.19) Explain Value creation within strategic business units
Answer:Value creationisthe primaryaimof anybusinessentity.Creatingvalue for customers helps
sell products and services, while creating value for shareholders, in the form of increases in stock
price, insures the future availability of investment capital to fund operations. From a financial
perspective,value issaid to be created when a business earns revenue (or a return on capital) that
exceedsexpenses(orthe costof capital). But some analysts insist on a broader definition of "value
creation"thatcan be consideredseparate fromtraditional financialmeasures."Traditional methods
of assessing organizational performance are no
Q.20) What is the companies cost of capital?
Answer:
 The requiredrate of return: Investorsuse the RRRto decide where toputtheirmoney.They
compare the return of an investmenttoall otheravailable options, taking the risk-free rate
of return, inflation and liquidity into consideration in their calculation.
 The cost of equity capital: The cost of equity can be a bit tricky to calculate as share capital
carries no "explicit" cost. Unlike debt, which the
Q.21) explain the below Mergers: impulse, regret and success
Answer:
 The mergerdecision:Ina successful merger,bothorganizations come to the table as equals
withstrengthsandweaknesses.One organizationisnotpursuingthe other. People bring an
inherenttendencytocharacterize behaviorsof others as “protectionist” or “driven by turf.”
My experiencehasbeen,however, that what one person perceives as turf, another person
interpretsasimportantandgood.Members should discuss the necessity of relying on each
other’s different abilities, understanding,
Q.22) Do the shareholders of acquiring firms gain from mergers?
Answer:Numerousstudiesexamine the financial impact of mergers on shareholder wealth. All find
target firm shareholders recording large gains but few uncover gains accruing to stockholders of
acquiring firms. Equally puzzling, many studies show acquiring firm share prices falling for up to
three years after consolidation, a result largely inconsistent with expectations that mergers raise
profitability.
Some economistsclaimthe existing economic and legislative environment prevents acquiring firm
shareholders from earning large takeover gains.

7. Q.23) What pay-outs should we make to shareholders?
Answer:A numberof leadingcompanieshave adopted the sensible approach of regularly returning
to shareholdersall unneededcashandusingshare repurchasesto make up the difference between
the total payoutanddividends.While these companiesdon’thave formal publishedpolicies,youcan
deduce themfromactual practice. Share repurchasesoffer companies more flexibility to hold onto
cash for unexpected investment opportunities or shifts in a volatile economic environment. In
contrast, companies that pay dividends enjoy less flexibility because investors have been
conditioned to expect cuts in them only in the most dire circumstances. Thus, managers should
employ dividends only when they are certain they
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
“ help.mbaassignments@gmail.com ”
or
Call us at : 08263069601