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1. Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
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ASSIGNMENT
DRIVE Fall 2015
PROGRAM BBA
SEMESTER V
SUBJECT CODE & NAME BBA502 &FINANCIAL MANAGEMENT
BK ID B1850
CREDIT 4
MARKS 60
Note –Please provide keywords, short answer, specific terms, specific examples and marksbreak -
up (wherever necessary)
Note –Answer all questions. Kindly note that answers for 10 marks questions should
beapproximately of 400 words. Each question is followed by evaluation scheme.
Question.1. Explain profit maximization. Write the objectives of profit maximization.
Answer:In economics, profit maximization is the short run or long run process by which a firm
determinesthe price andoutputlevel thatreturnsthe greatestprofit.There are several approaches
to this problem. The total revenue–total cost perspective relies on the fact that profit equals
revenue minuscostandfocusesonmaximizingthisdifference, and the marginal revenue–marginal
cost perspective is based on the fact that total profit reaches its maximum point where marginal
revenue equals marginal cost.
The general rule is that firm maximizes profit by producing that quantity of output where marginal
revenue equalsmarginal costs.The profitmaximizationissuecanalsobe approached from the input
side.Thatis,what is the profit maximizing usage of the variable input? [10] To maximize profit the
firm should increase usage of the input "up to the
Question.2.Explainthe concept of Time value of Money.Explain with an example thecompounding
method.
Answer:A time value of moneycalculationisacalculationthatsolvesforone of several variablesina
financial problem.

2. In a typical case,the variablesmightbe:abalance (the real or nominal value of a debt or a financial
assetinterms of monetaryunits), aperiodicrate of interest, the number of periods, and a series of
cash flows.(Inthe case of a debt,cashflowsare paymentsagainstprincipal and interest; in the case
of a financial asset, these are contributions to or
Question.3. What do you understand by financial leverage? Explain Earning Per Share (EPS)
andReturn on Equity (ROE).
Answer:Financial leverage simply means the presence of debt in the capital structure of a firm. In
other words, we can also call it existence of fixed-charge bearing capital which may include
preference sharesalong with debentures, term loans etc. The objective of introducing leverage to
the capital is to achieve maximization of wealth of the shareholders.
Financial leverage dealswith the profit magnification in general. It is also well known as gearing or
‘trading on equity’. The concept of financial
Question.4. Explain the Capital Investment Planning and Control phases.
Write short notes on :
a) Net Present Value (NPV)
b) Internal Rate of Return(IRR)
Explanationof capital investmentplanningandcontrol phasesNetPresentValue(NPV)- Calculations-
Acceptance Rule-meritsand demeritsIRR-)- Calculations-Acceptance Rule-merits and demerits
Answer:At least five phases of capital expenditure planning and control can be identified:
 Identification or origination of investment opportunities
 Development of forecasts of benefits and costs
a) Net Present Value (NPV)
Answer:Infinance,the netpresentvalue (NPV) ornetpresentworth(NPW) isdefined as the sum of
the present values (PVs) of incoming and outgoing cash flows over a period of time. Incoming and
outgoing cash flows can also be described as

3. b) Internal Rate of Return(IRR)
Answer:The internal rate of return (IRR) or economic rate of return (ERR) is a method of calculating
rate of return. The term internal refers to the fact that its calculation does not incorporate
environmental factors (e.g., the interest rate or inflation).
It isalso calledthe discountedcash flowrate of return(DCFROR).Inthe contextof savings and loans,
the IRR is also called the effective interest rate.
Question.5.Explain the modes ofsecurity which a bank may require.Write the featuresofordinary
shares.
Answer:When a borrower is granted a loan from a bank, the bank will often want security for the
loanit makes.Takingeffective securityover an asset means that the bank can, on the insolvency of
the borrower,take possessionof thatasset,sell itanduse the proceeds to repay the loan. This puts
the bank in a stronger position than creditors who do not have security.
Question.6. Explain the three motives for holding cash. Write the facets of cash management.
Answer: Explanation of three motives for holding cash
Cash isknownas mostliquidandlessproductive assetsof afirm. If cash remains idle, earns nothing
but involvescostintermsof interestpayable tofinance it.Although cash is least productive current
assets, firm should hold certain amount of cash for marketable securities. Mainly, there are three
motives for holding cash.
1. Transaction Motive Of Holding Cash: Transactionmotive referstothe needtoholdcash to satisfy
normal disbursement collection activities associated
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
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or
Call us at : 08263069601