Assignments

OMBC-203_FM_70:30 Assignment Submission Last

Date Time: Jul 15 2024 11:55PM

Assignment: 1

Instructions:

 Number of Questions: 20
 Maximum Marks: 20
 Each question carries 1 Mark.
 All questions are compulsory.
 Attempts: 1

1
Which of the followings is not an objectives of financial management?
Maximization of wealth of shareholders
Arrangements of financial resources
Mobilization of funds at an acceptable cost
Ensuring discipline in the organization
2
Which of the following statements is correct regarding profit maximization as the primary goal of the
Profit maximization considers the firm's risk level.
Profit maximization will not lead to increasing short-term profits at the expense of lowering expected
Profit maximization does consider the impact on individual shareholder's EPS.
Profit maximization is concerned more with maximizing net income than the stock price.
3
How are earnings per share calculated?
Use the income statement to determine earnings after taxes (net income) and divide by the previous p
from the previously calculated value.
Use the income statement to determine earnings after taxes (net income) and divide by the number of
Use the income statement to determine earnings after taxes (net income) and divide by the number of
Use the income statement to determine earnings after taxes (net income) and divide by the forecasted
from the previously calculated value.
4
What is the most appropriate goal of the firm?
Shareholder Wealth maximization
Profit maximization
Stakeholder maximization
EPS maximization
5
Finance Function comprises
Safe custody of funds only
 Expenditure of funds only
Procurement of finance only
Procurement & effective use of funds
6
The principal-agent problem describes a situation where:
managers disagree with employees on production issues
managers follow their own inclinations, which often differ from the aims of shareholders
shareholders prevent managers from maximising profits.
firms fail to maximise long-term investment
7
A(n) would be an example of a principal, while a(n) would be an example of an agent.
shareholder; manager
manager; owner
accountant; bondholder
shareholder; bondholder
8
The principal–agent relationship entails that the principal
hires the agent.
is smarter than the agent.
provides guidance to the agent.
is hired by the agent.
9
Which of the following is not an ingredient of a principal–agent problem?
Conflict of interest.
Asymmetric information.
Equilibrium.
Surplus available.
10
Which one of the following is the best example of an agency problem? Assume the company is payi
Juan, the chief financial officer, travels to France to meet with the bank that is loaning the firm mone
he tours Paris.
Mike, the president, travels to China to attend an international convention related to the company's lin
Wall of China.
Ann, the controller, travels to Orlando, Florida to visit Disney World with friends. While there, she ta
opportunities at the firm.
Luisa, the marketing director, travels to California to attend a sales convention. While there she visits
11
Which one of the following represents the best effort to reduce the agency problem?
paying senior managers a cash bonus each year based on the number of people employed by the comp
giving senior managers bonuses consisting of shares of company share whenever the company impro
increasing the salary of the company president every time the company opens a new store
Providing company cars to all managers employed by the firm for more than one year
12
Which of the following is an example of an agency cost?
 A company always buys the latest computer equipment for its employees
Senior management receives stock options enabling them to buy company stock at an exercise price w
Managers can use the company float plane to fly to their cottages on weekends
Sales reps are provided with company cars to use when visiting clients
13
Agency problems are best defined as:
difficulties arising in dealings with real estate agencies
problems arising due to potential misalignment between the interests of owners, creditors, and manag
problems arising due to the complete alignment of the interests of owners, creditors, and managers
issues surrounding whether or not to outsource production to an external agency
14
Which of the following is not a source of corporate financing?
Equity
Retained earnings
Bonds
Fixed capital
15
The __________ decision involves a determination of the total amount of assets needed, the compo
need to be reduced, eliminated, or replaced.
asset management
financing
investment
accounting
16
The __________ decision involves efficiently managing the assets on the balance sheet on a day-to
asset management
financing
investment
accounting
17
All constituencies with a stake in the fortunes of the company are known as ________.
shareholders
stakeholders
creditors
customers
18
When owners are managers (such as in a sole proprietorship), a firm will have agency costs.
True
False
19
Maximization of the current earnings of the firm is the main goal of the financial manager.
True
False
20
The board of directors has the power to act on behalf of the shareholders to hire and fire the operati
the directors are "principals" and the shareholders are "agents".
True
False

Assignment: 2

Instructions:

 Assignment 2 is based on the following text/paragraph of case

study/situational exercise etc. You first need to read this text and then
answer the following MCMR i.e. Multiple choice multiple response
questions.
 Number of Questions: 5
 Each question carries 2 Mark
 All Five Questions are Mandatory.
 Attempts: 1

Soham is trying to coordinate the functioning of various departments in the company XYZ. Departmen
Marketing. He has been trying to do this with the help of financial Management. He quiet often call peo
to work within means he has been prescribed a budget for it. During the time when he is doing a analys
decisions of present with the outcomes of future. This can especially be seen two of the prominent decis
financing decisions. So, the interlinking of these two decisions is assumed by him. When the year ends i
decisions regarding the various departments. This happens because he can evaluate the performance of
generated and the expense incurred. He knows that no business is the risk proof. However, he knows th
business can suffer can be minimised, thus laying foundation for a better future. Less involvement in th

2 Identify that the importance of Financial Planning is discussed in following

lines? “Soham is trying to coordinate the functioning of various departments
in the company XYZ. Departments include like Sales, Production &
Marketing.”

Helps in avoidance of business shocks & Surprises.

Helps in coordinating financial management functions.
Provide link between investment & Financing decisions.
Helps in coordinating various business functions.

3 Identify the concepts has been highlighted in above case?

Financial Management
Capital Budgeting
Capital Structure
Financial Planning
4 Select which importance of financial planning is discussed in below lines.
During the time when he is doing a analysis of all the things, he connects the
decisions of present with the outcomes of future.

Helps in coordinating various business activities.

Tries to link between present & Future
Helps in forecasting what may happen in future under different situation.
Tries to link between present financial planning & Future financial Planning

5 “One is the Investment and other is the financing …. assumed by him.”

Which importance of financial planning is discussed in above paragraph?

Helps in Capital structure decisions.

Helps in linking the present with future
Helps in linking the investment decision.
Helps in linking the financing decision.

6 Identify which type of financial planning is focused in the above case.

Short term Financial Planning

Long term Financial Planning
Medium term financial Planning
Instant Planning

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