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1
Seat No.: __________ Enrolment No._____________
GUJARAT TECHNOLOGICAL UNIVERSITY MBA Semester –III Examination Dec. - 2011
Subject code: 2830001 Date: 05/12/2011
Subject Name: Strategic Management
Time: 10.30 am – 01.30 pm Total Marks: 70 Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Describe the contemporary competitive landscape. Explain the role of Technology
and Globalization on the nature of current competitive landscape.
07
(b) Discuss the four steps of external analysis process in detail. What does the firm intend
to follow this process?
07
Q.2 (a) Explain the terms – Market Commonality, Resource Similarity. How can be these
exploited to analyze the competitors?
07
(b) Distinguish between core competencies and competitive advantage. Does the success
of an organization is merely dependent on its competitive advantage? – justify your
answer with supportive arguments.
07
OR
(b) Does the higher proportion of resources to the competitors ensure the competitive
advantage for a firm? Why is it essential to develop capabilities for a success of the
firm?
07
Q.3 (a) How can the business-level strategies be used to position the firm relative to the five
forces of competition in a way that helps the firm to earn above-average returns?
07
(b) Discuss the potential motives for the firm’s decision to employ acquisition strategy
for achieving strategic competitiveness.
07
OR
Q.3 (a) Discuss various restructuring strategies for the corporate along with their short-term
and long-term outcomes.
07
(b) Evaluate each business level strategies in terms of their associated competitive risks. 07
Q.4 (a) Discuss the international corporate-level strategies. How do they differ from each
other?
07
(b) What is corporate governance? Briefly describe the internal and external governance
mechanisms used in modern corporations.
07
OR
Q.4 (a) Compare and contrast the operational controls and strategic controls. 07
(b) Describe the key strategic leadership actions required for the success of a strategic
management process.
07
Q.5 (a) “Ethics and social responsibilities are very crucial factors to consider while
formulating the corporate level strategies.” – explain in detail with your views.
07
(b) How the pattern of organizational structural growth and its strategies are interrelated?
Explain the reciprocal relationships between them.
07
OR
Q.5 (a) Discuss the effects of CEO succession and top management team composition on the
strategy of the organization.
07
(b) How can the Balance Scorecards framework be implemented to achieve the expected
performance?
07
*************
1
Seat No.: __________ Enrolment No._____________
GUJARAT TECHNOLOGICAL UNIVERSITY MBA Semester –III Examination Dec. – 2011
Subject code: 2830002 Date: 08/12/2011
Subject Name: Legal Aspects of Business (LAB)
Time: 10.30 am – 01.30 pm Total Marks: 70 Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) What are the provisions of the Companies Act 1956 for the conversion?
(1) A private company into a public company.
(2) A public company to a private company.
07
(b) Describe the salient features of the Consumers Protection Act,
1986.Enumerate the aim and objectives of the act.
07
Q.2 (a) What is the importance and meaning of copyright? Enumerate the works
in which copyright subsists.
07
(b) Sunil agrees to sell a painting to Atul for Rs. 20,000. The painting needs a
new frame. Sunil tells Atul that the painting will be ready for him to
collect in a fortnight. However, when Atul came to collect and pay for the
painting, Sunil refuses to give it to him. Advise Atul.
07
OR
(b) Describe the characteristic features of negotiable instruments. Also
explain the presumptions, legally permitted in respect of negotiable
instruments.
07
Q.3 (a) What is breach of contract? What remedies are available to the non
breaching party in the event of breach of contract?
07
(b) “The Memorandum of Association is an unalterable character of a
company” comment. Also discuss contents of Memorandum of
Association.
07
OR
Q.3 (a) Who is authorized to issue a Digital Signature Certificate? What type of
representations is made by the certifying authority at the time of issue of a
Digital Signature Certificate?
07
(b) X is the Director of 21 companies, which includes directorship in respect
of a private company, which has recently become a public company under
Section 43(A). Comment.
07
Q.4 (a) What is an Indemnity? Bring out differences between a contract of
indemnity and contract of guarantee.
07
(b) What are the rules as given in the Sale of Goods Act, 1930, regarding
fixation of price?
07
OR
Q.4 (a) What do you understand by the term ‘Patent’? Describe the procedure for
obtaining a patent.
07
(b) What is Prospectus? Describe its contents. 07
2
Q.5 (a) What do you mean by discharge of a negotiable instrument? Discuss the
ways through, which an instrument may be discharge.
07
(b) What is Coercion? State its effect on the validity of a contract? 07
OR
Q.5 (a) What do you understand by the term Agency? How is an agency created? 07
(b) Write a note on overview of Environmental legislation in India 07
*************
1
Seat No.: __________ Enrolment No._____________
GUJARAT TECHNOLOGICAL UNIVERSITY MBA Semester –III Examination Dec. – 2011
Subject code: 2830201 Date: 13/12/2011
Subject Name: Strategic Financial Management
Time: 10.30 am – 01.30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Explain the role of Strategic Financial Management & its functions in business. 07
(b) What are the points to be given importance in project planning in the post
liberalization and global scenario?
07
Q.2 (a) Under what circumstances is the business valuation exercise undertaken by corporate
finance managers and investors?
07
(b) The following information pertains to XYZ Ltd.
Net Profit Rs. 60 lakh
Outstanding 12% preference Shares Rs.200 lakh
No. of outstanding equity shares 6 lakh
Return on Investment 20%
Equity capitalization rate 16%
Required:
i) What should be dividend payout ratio so as to keep the
share price at Rs. 41.25 by using Walter Model?
ii) What is the optimum dividend payout ratio according to
Walter Model?
07
OR
(b) Darshna Mills Ltd. is considering two mutually exclusive investment proposals for its
expansion program. Proposal A requires an initial investment of Rs. 7,50,000 and
yearly cash operating cost of Rs. 50,000. Proposal B requires an initial investment of
Rs. 5,00,000 and yearly cash operating cost of Rs. 1,00,000. The life of the
equipments used in both the proposals will be 12 years, with no salvage value;
depreciation is on straight line basis for tax purpose. The anticipated increase in
revenue is Rs. 1,50,000 per year in both the investment proposals. The firm’s tax rate
is 35 percent and its cost of capital is 15 percent. Which investment proposal should
be undertaken by the company?
07
Q.3 (a) Explain
i) Capital Budget under Inflation.
ii) Reasons of Project Failure.
07
(b) A company has the following estimates of the present values of the future cash flows
after taxes associated with the investment proposal, concerned with expanding the
plant capacity. It intends to use a decision tree approach to get a clear picture of the
possible outcomes of this investment. The plant expansion is expected to cost Rs.
3,00,000. The respective PVs of future CFAT and probabilities are as follows.
07
2
With Expansion Without Expansion Probabilities
3,00,000 2,00,000 0.2
5,00,000 2,00,000 0.4
9,00,000 3,50,000 0.4
Advice the company regarding the financial feasibility of the project
OR
Q.3 (a) Explain
i) Sensitivity Analysis in Capital budgeting.
ii) Implications of Corporate Restructuring.
07
(b) The market value of two companies Surya Ltd. and Chandra Ltd. are Rs. 175 lakh and
Rs. 75 lakh respectively. The share capital of Surya Ltd. consists of 3.5 lakh ordinary
shares of Rs. 10 each and that of Chandra Ltd. is 2.2 lakh ordinary shares of Rs. 10
each.
Surya Ltd. is proposing to take over Chandra Ltd. The pre-merger earnings are Rs. 19
lakh for Surya Ltd. and Rs. 10 Lakh for Chandra Ltd. The merger is expected to result
into a gain of Rs. 4 lakh in the form of post tax cost savings. The pre-merger P/E ratios
is 10 for Surya Ltd. and 8 for Chandra Ltd. The possible combined P/E ratios are 9 &
10.
You are required to calculate
a) Minimum Combined P/E ratio to justify the merger
b) Exchange ratio of shares if combined P/E ratio is 9.
c) Exchange ratio of shares if combined P/E ratio is 10.
07
Q.4 (a) What is financial restructuring? What are the key components of financial
restructuring scheme? Develop a financial restructuring scheme for a financially
troubled firm.
07
(b) A company employs certainty-equivalent approach in the evaluation of risky
investments. The capital budgeting department of the company has developed the
following information regarding a new project.
Year Expected
CFAT (Rs.
Thousands)
Certainty
Equivalent
Quotient
0 (200) 1.0
1 160 0.8
2 140 0.7
3 130 0.6
4 120 0.4
5 80 0.3
07
The firm’s cost of capital is 18 percent; its cost of debt is 9 percent and the riskless
rate of interest in the market on the government securities is 6 percent. Should the
project be accepted? OR
Q.4 (a) Ongoing restructuring is must for survival due to globalization, liberalization and
economic reforms. Discuss.
07
3
Q.4 (b) Calculate the Economic Value Added (EVA) with the help of the following
information of S Ltd.
Financial Leverage 1.4
Capital Structure Equity capital, Rs. 170 lakh
Reserves and surplus, Rs 130 lakh
10% debentures, Rs 400 lakh
Cost of Equity 17.50%
Income Tax Rate 30%
07
Q.5 (a) Explain the significance of operating and financial leverage analysis for a finance
manager in corporate profit and financial structure planning.
07
(b) A financial advisor of Krutika Industries Ltd. is confronted with two alternative
financing plans for raising Rs 10 lakh that is needed for plant expansion and
modernization. One choice is 12% Debt issue. The other is to issue 8,000 equity
shares at the current market price per share of Rs 125.
The modernization and expansion program is expected to increase the firm’s
operating profits (EBIT) by Rs. 2,00,000 annually. The firm’s condensed financial
statements for the current year are given below.
Balance Sheet as on March 31 current year
Amount Assets Amount
Current Liabilities 500000 Current Assets 1600000
10 % Long term Loan 1500000
Plant & Equipment
(Net) 3400000
Reserves and Surplus 1000000
Equity capital (Shares of
Rs. 100 each) 2000000
5000000 5000000
Income statement for the current year
Operating profits 800000
Less Interest Expenses (0.10 x Rs 15,00,000) 150000
Income before taxes 650000
Less Taxes (@0.35) 227500
Net Income 422500
Earnings per share 21.12
Dividend per share 10.56
However the finance advisor is concerned about the effect that issuing debt might have
on the firm. The average debt ratio for firm in industry is 45 percent. He believes that
if this ratio is exceeded, the P/E ratio will be 7 because of the potentially greater risk.
If the firm increases its equity capital, he expects the P/E ratio to increase to 8.5. He
also wonders as to what will happen to the dividend yield under each plan. The firm
follows a practice of paying dividends equal to 50 percent of net income.
07
a) Determine the debt ratio, under each plan, after the securities are issued.
b) Determine the expected net income in the next year, expected EPS and
expected market price of the equity shares.
c) Which form of financing should the company use to follow a policy of
maximizing market value of the shares?
OR
4
Q.5 (a) Enlist the key factors which govern the capital structure decisions and explain in detail
any three factors.
07
(b) The Evergreen company has a choice of raising an additional sum of Rs 50 lakh either
by the sale of 10 percent debentures or by issue of additional equity shares of Rs. 50
per share. The current capital structure of the company consists of 10 lakh ordinary
shares.
i) At what level of earnings before interest and tax (EBIT) after the new capital is
required, would earnings per share (EPS) be the same whether new funds are raised by
issuing ordinary shares or by issuing debentures?
ii) Also determine the level of EBIT at which uncommitted earnings per share (UEPS)
would be the same if sinking fund obligations amount to Rs. 5 lakhs per year. Assume
a 35 percent tax rate.
07
*************
Seat No.: __________ Enrolment No._____________
GUJARAT TECHNOLOGICAL UNIVERSITY MBA Semester –III Examination Dec. - 2011
Subject code: 2830302 Date: 15/12/2011
Subject Name: Compensation Management (CM)
Time: 10.30 am – 01.30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) How a reward system operates and briefly explains any
five components of reward system and its interrelationship. 07
(b) What is the difference between incentives and rewards and
discuss the types of non-financial rewards. 07
Q.2 (a) Discuss the different types of non-cash recognition awards
and Explain Analytical job evaluation schemes 07
(b) Discuss the objectives and types of individual contingent
pay. 07
OR
(b) Write a note on rewarding manual workers in brief. 07
Q.3 (a) Explain provisions of finance and audit under the
employees state insurance act,1948. 07
(b) State the provisions of payment of minimum rate of wages
under the minimum wages act,1948. 07
OR
Q.3 (a) What do you understand by expression “salary” under the
Income tax act provisions with respect to salaried persons. 07
(b) Briefly explain the payment of gratuity act,1972. 07
Q.4 (a) Explain expatriate pay with four approaches to calculating
expatriate pay. 07
(b) Compare the two main types of occupational pension
schemes defined benefit and defined contribution. 07
OR
Q.4 (a) Explain The role of the reward professional in
implementing reward strategies, policies and processes. 07
(b) What are the reasons for evaluating reward systems and
what are the possible reasons for the lack of interest in
evaluation and what can be done about it?
07
Q.5 (a) What did you understand from mediclaim policy explain
with features. 07
(b) Explain provisions related to Maternity Benefit act,1981. 07
OR
Q.5 (a) Discuss payment of wages act 1936,for rules of deduction
and enforcement of the act. 07
(b) Read the case given below and answer the following
questions. 07
Fortune furtnitech is a state-of-the-art modular furniture manufacturer,
started with an initial ₨ 500 crore investment, by raising a term loan from
different financial institutions and about 65% contribution from the traditional
family business. The group has a traditional family history of woodcraft
manufacturing. Leveraging the family trend, the present owner Asim Singh and
his wife Ragini ventured into this business. Asim Singh has toured extensively
all over the world with his father, right from his childhood. According to Mr.
Singh, India has top quality berg woods in its North-eastern states, which are
imported by countries such as the US. However, Indians use them as firewood,
because of lack of awareness. The company launched an ambitious plan to
manufacture and sell hardwood furniture worldwide, as their study indicated
that the Indian market for furniture is still unorganized, and that the affluent
class used imported furniture made of concentrated wood dust or waste
products.
To achieve this goal , the company recruited the best designers, business
heads, and production people worldwide. Many designers were either Italian
born, or trained in Italy. The biggest challenge the company faced was in
designing managerial compensation.
Management compensation received attention primarily because of its
performance implications and strategic fit in Fortune Furnitech. The HR
manager claimed that it had a positive effect on the company’s financial
performance and recommended the appropriateness of different compensation
for specific strategic situations. However, he could not convince the top
management of the need to formulate an executive compensation package
accordingly.
Asim Singh only considered such alignment for executives on the board,
arguing that their achievement was traceable. The HR manager argued that
compensation cost in the company was the second largest expense category, the
first being the cost of raw materials and other implements (excepting
labour).Hence, it had to be managed strategically, aligning with the
performance of the organization and its fit with overall organizational strategy.
He supplied extensive literature to sell his argument. He complained that the
organization did not have a well-documented compensation philosophy, despite
this evidence. Some incentives were also counterproductive. He argued that it is
time to develop executive compensation, de-emphasizing the immediate
financial gains and tagging it with long-range strategy of the organization. After
listening to the HR head’s argument, the CEO directed him to develop a model
that may work in the organization.
[Que.:] Imagine you are the HR manager. Design the appropriate pay model for
executives of the organization.
*************
1
Seat No.: _____ Enrolment No.______
GUJARAT TECHNOLOGICAL UNIVERSITY MBA Sem-III Regular Examination January 2011
Subject code: 830201
Subject Name: Corporate Tax & Financial Planning (CT & FP)
Date : 12/01/2011 Time: 10:30am-1.00pm Total Marks: 70
Instructions: 1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Discuss the relationship between residential status of tax payers and incidence
of tax
07
(b) Mrs.Madhu is offered an employment by PVR Ltd. at a basic salary of
Rs.1,25,000 per month. Other allowance offered by the company includes:
Dearness allowance: 15 percent of the basic pay (not forming part of salary for
calculating retirement benefits)
Bonus Pay: 2 Months basic salary
Project allowance: 5 percent of basic pay
The company gives her an option either to take a rent free unfurnished
accommodation at Indore for which the company would bear the rent of
Rs.45,000 per month or to accept a house rent allowance of Rs.45,000 per
month and she can find out her own accommodation. She wants to invest
Rs.60,000 in Public Provident Fund and Rs.35,000/- in Reliance Tax Saver
(ELSS) fund. As a Tax Consultant, determine which one is a better option for
Mrs.Madhu.
07
Q.2 (a) The following is the profit and loss account for the year ending 2009-10 of
Mr.Kabra who is a businessman.
Particulars Amt Particulars Amt
Sundry Charges 35,650 Gross Profit 4,81,660
Insurance 3,500 Commission 1,05,500
Salary 1,12,000 Interest on
Donation to Debenture(22,500) 25,000
Political Party 1,560 Short Term Gain 73,000
Income Tax 2,400
Depreciation 1,00,000
Advertisement 25656
Office Expenses 42,500
Advanced Tax 17,000
Net Profit 3,44,894
6,85,160 6,85,160
07
2
1. Depreciation as per income tax rule is only Rs.75,000
2. Bad debts of a business which was discontinued in earlier years has been
recovered during the year Rs.15000
3. The advertisement expenses include Rs.5000 which is paid for printing
of Souvenir.
4. Salary includes Rs.50,000 paid to his son who is rendering part time
services in his business
5. Sundry charges includes Rs.22,000 paid by bearer cheque
Compute the tax liability of Mr.Kabra if he invests Rs.50,000 in Public
Provident Fund and Rs.50,000 in ELSS mutual Funds Schemes?
(b) What are the provision for computing income on estimated basis under section
44 AE and 44 AF? Explain with suitable numerical examples.
07
OR
(b) Discuss how undisclosed income and investments are taxed 07
Q.3 (a) From the following information regarding certain transactions of Shrikant,, calculate
taxable amount of Capital Gain.
1. Jewelry purchased on 10-3-75 for Rs.109, 000 was sold on 2-5-2009 for Rs.12,
04,810/-. The fair market value of the Jewellary on 1-4-1981 was
Rs.1,10,000/-
2. He had to pay brokerage of Rs.2000/- on Purchase and Rs.4810/- on sales of
the said Jewellary.
3. On 1-11-2009 he purchased Bonds of NHAI of Rs.1,92,160/- which are
repayable after 3 years.
4. Cost Inflation Index of 1981-82 was 100 and that of 2009-10 632.
07
(b) Discuss the provisions of clubbing of income under the Income Tax Act, 1961 07
OR
Q.3 (a) IVRC Ltd. Sells the following assets:
Agriculture Bonus House
Land Share Property
Date of Sale 31/01/2010 7/11/2009 25/3/2010
Date of
Acquisition 9/5/1993 4/4/1983 6/6/1982
Sales
Consideration 9,00,000 4,50,000 6,50,000
Purchase
Consideration 70,000 Nil 1,00,000
The agriculture land is situated in an urban area and used for agriculture purpose
since 1993.
IVRC Ltd. invests in the following assets as on dated 2/4/2010
1. Rs.4,00,000 in the Bonds (Redeemable on June 5,2013) of National
Highway Authority
2. Rs.5,00,000 in the Bonds( Redeemable on May 10,2015) of Rural
Electrification Corporation
3. Rs.80,000 in Agriculture Land
07
3
Year Cost Inflation Index
2009-10:632, 1993-94:244, 1992-93:223, 1983-84:116, 1982-83:109, 1981-
82:100
Find out the Capital Gain chargeable to tax.
(b) Explain with examples set off and carry forward of losses and its exceptions 07
Q.4 (a) JK Ltd obtains a telecom license on 22/04/2009 for a period of 10 years which
ends on 31/03/2019 and paid Rs.27,00,000 as licence fee. Find out the amount
of deduction under section 35 ABB under following situations:
1. If the entire amount is paid on April 1,2010.
2. If the entire amount is paid in three instalments on
April 30, 2009, April 30, 2010 and April 30, 2011.
07
(b) “Tax Planning is crucial while deciding upon the nature of business.” Explain
with numerical examples.
07
OR
Q.4 (a) Discuss various tax incentives available while selecting a business location. 07
(b) Differentiate between Tax Avoidance and Tax Evasion 07
Q.5 (a) Supernova Ltd. is planning for an expansion of its business. It has to make a
choice between debt issue and equity issue for the expansion of business. The
current position of the company is as follows:
10% Debenture 8,00,000
Equity Share Capital(Rs.100 Per Share) 20,00,000
Reserve and Surpuls 12,00,000
Total Capital 40,00,000
Sales Turnover 12,00,000
Less: Total Cost 10,00,000
EBIT 2,00,000
Less: Interest @ 10% 80,000
EBT 1,20,000
Less: Tax @ 33.2175% 39,861
EAT 80,139
The expansion of business will cost Rs.20, 00,000. If this is financed through
the issue of 10% Debenture then the price- earnings ratio will be 5 times and if
financed through the new issue of equity shares then the price earnings ratio will
be 6 times. The expansion will generate additional sales of Rs.60, 00,000 with a
return of 10% on sales before interest and tax.
If the company wants to maximize the market value of the shares, then which
alternative should be adopted by the Supernova Ltd.?
07
07
(b) Evaluate the impact of budget 2010 with reference to an individual and
corporate point of view.
07
OR
4
Q.5 (a) Ivory Ltd. wants to raise capital of Rs.20,00,000 for a project where earning
before tax is 30% of the capital employed. The company can raise debenture @
12% p.a. suggest which of the three alternatives should be adopted by the
company:
1. Rs.20,00,000 to be raised by equity shares
2. Rs.15,00,000 by equity and 5,00,000 by debentures of 12 Percentage
3. Rs.5,00,000 by equity and Rs.15,00,000 by debentures of 12 Percentage
Assume that the corporate tax rate is 30%, education cess is 2 percent and
secondary and higher secondary education cess is 1 percent.
07
(b) Discuss tax planning aspects of “Make or Buy” decision 07
*************
1
Seat No.: __________ Enrolment No._____________
GUJARAT TECHNOLOGICAL UNIVERSITY MBA Semester –III Examination Dec. - 2011
Subject code: 830201 Date: 13/12/2011
Subject Name: Corporate Taxation & Financial Planning
Time: 10.30 am – 01.30 pm Total Marks: 70 Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Define the terms: (1) Assessment Year & Previous Year (2) Person (3) Gross
Total Income (4) Industrial Company (5) Agricultural Income (6) Surcharge
(7) Foreign Income
07
(b)
X, a foreign national, furnishes the following particulars of his income relevant
for the previous year 2010-11:
Profit on sale of plant at London (one-half received in India) – Rs. 1,46,000
Profit on sale of plant at Delhi (one-half received in London) – Rs. 1,02,000
Salary from an Indian company received in London (one-half paid for rendering
services in India) – Rs .60,000
Interest on U. K. Development Bonds (entire amount received in London) –
Rs.40,000
Income from property in London received there – Rs. 30,000
Income from agriculture in London received there – Rs. 25,000
Dividend received in London on May 6, 2010 from a company registered in
India but mainly operating in U. K. – Rs. 17,000
Profit from a business in Delhi managed from India – Rs. 49,000
Rental income from a property in Nepal – Rs. 12,000
Gift in foreign currency received on September 20, 2010 from a friend (one-
third of which is received in India and remaining amount received outside India
– Rs. 3,70,000
Determine gross total income of X for the A.Y. 2011-12 if he is a) Non-resident
and b)Resident and ordinarily resident
07
Q.2 (a) How the tax liability of a company will be calculated under Normal Provision
and under Minimum Alternate Tax show with imaginary figure? 07
(b) X and Y form a partnership firm on April 1, 2010 (profit sharing ratio 2:3) by
investing Rs. 10,00,000 and Rs. 15,00,000 respectively. The investment has
been financed from the following sources:
X (Rs.) Y (Rs.)
Gift from Mrs. X 6,60,000 ----
Gift from Mrs. Y ---- 8,00,000
Past savings from X and Y 3,40,000 7,00,000
For the year ending March 31, 2011, share of profit from the firm is as follows:
X (Rs.) Y (Rs.)
Interest on capital @ 12% 1,20,000 1,80,000
Salary as working partner 24,000 24,000
Share of Profit 1,08,000 1,62,000
Find out the income chargeable to tax in the hands of X and Mrs. X.
07
2
OR
(b) X, an employee of PQR Ltd., draws Rs. 2,00,000 as basic pay, Rs. 15,000 as
dearness allowance (not being part of salary) and Rs.20,000 as bonus. Besides
the company provides a rent-free unfurnished house in Goa. The house is not
owned by the company. Determine the taxable value of the perquisite for the
A.Y. 2011-12 if lease rent of the house is : a) Rs.20,000 p.a. b) Rs.48,000 p.a. c)
Rs.26,000 p.a.
07
Q.3 (a) Discuss the provisions of Income Tax Act for computation of Cost of
Acquisition of Original and Bonus Shares as the part of sale considerations. 07
(b) X submits the following particulars of income/loss for the A.Y. 2011-12:
Profits of Business I carried on in India – Rs. 2,42,000
Loss of Business II carried on in India – Rs. (1,26,000)
Profits of Business III carried on in Germany (though income is earned and
received in Germany, business is controlled from Bombay) – Rs. 2,17,000
Loss of Business IV carried on in Germany (though income is earned and
received in Germany, business is partly controlled from Germany and partly
from Canada) – Rs. (1,56,000)
Unabsorbed depreciation of the A.Y. 2002-03:
Business I – Rs. (1,07,000)
Business III – Rs. (1,08,000)
Business IV – Rs. (2,15,000)
Income from property situated in India – Rs. 1,18,000
Income from property situated in Germany – Rs. 1,20,000
Determine the net income of X for the A.Y. 2011-12 on the assumption that he
is (i) resident and ordinarily resident in India (ii) resident but not ordinarily
resident in India
07
OR
Q.3 (a) Discuss in detail Sections 80IC and 80ID as the tax incentives under the Income
Tax Act for selection of Location of New Business. 07
(b) Mr. X is an entrepreneur. He provides you the following alternatives to select
the best form of organization in regards with the best tax planning.
Particulars Alt.-A Alt.-B Alt.-C No. of partners 3 4 8
Profit sharing ratio Equal Equal Equal
Capital in equal proportion 10,00,000 15,00,000 80,00,000
Profit P.Y.- 2010-11 6,00.000 12,00,000 60,00,000
Other income of each partner 60,000 50,000 60,000
LIC Prem. of each partner 80,000 50,000 90,000
Salary p.m. of each partner 10,500 14,625 32,437.50
Mr. X has two option either partnership firm as per above mentioned
alternatives or proprietary firm. Suggest which form of organization is better for
him.
07
Q.4 (a) Discuss provisions of Section 80JJAA-Deduction in respect of employment of
new workmen. 07
(b) X (age : 32 years), posted at Bombay, receives a salary of Rs. 36,000 per month
during 2010-11 from A Ltd. His employer contributes Rs. 53,000 towards
provident fund. His other allowances are: special allowance Rs. 2,28,000 and
medical allowance: Rs. 22,200 and 0.5 per cent commission on sales achieved
by him. During the year, turnover achieved by X is Rs. 9,60,000. Employer
provides a Maruti-800 car with a chauffer for his private and official purposes
w.e.f. April 1, 2010. The amount of interest credited to provident fund on May
10, 2010 @ 11% p.a. comes to Rs. 25,660.
07
3
Income of X from other sources is Rs. 7,54,000.
Payments/ Contributions:
Insurance premium paid on own life (sum assured : Rs. 22,500) – Rs. 6,500
Insurance premium paid on the life of Mrs. X (sum assured : Rs. 1,00,000) – Rs.
4,000
Insurance premium paid on the life of major son (sum assured : Rs. 20,000) –
Rs. 3,100
Contribution towards PPF – Rs. 1,000
Contribution towards employee’s provident fund – Rs. 50,000
Contribution made for participating in ULIP – Rs. 2,000
Repayment of loan taken from LIC for purchase of a house (whose construction
is completed on March 10, 1987 and used by him for his residence) – Rs.
22,000
Tuition fee of X’s son – Rs. 12,500
Investments in units of a notified Mutual Fund for financing infrastructure
facility – Rs. 2,000
Determine the amount of tax liability on the assumption that provident fund is
(i) Statutory (ii) Recognised (iii) Unrecognised. OR
Q.4 (a) What do you mean by Tax Planning? Distinguish: Tax Avoidance and Tax
Evasion.
07
(b) X, not being covered by the payment of Gratuity Act, 1972, retires on January
6, 2011 from PQR and receives Rs. 1,24,000 as gratuity after service of 29
years and 11 months. His average monthly salary during March 1, 2010 to
December 31, 2010 is Rs. 8,500. Determine the amount of: a) taxable gratuity
b) gratuity exempted from tax for the A. Y. 2011-12.
07
Q.5 (a) Discuss with comparison the tax benefits for various forms of organization:
Firm, LLP and Company with reference to new business. 07
(b) XYZ Ltd. is contemplating an expansion programme. It has to make a
choice between debt issue and equity issue for its expansion programme. Its
current position is as under:
Rs.(in Crore)
10% Debt 80
Equity share capital(Rs. 10 per share) 200
Reserves and Surplus 120
Total capitalization 400
Sales 1,200
Less: Total Cost 1,076
EBIT 124
Less: Interest 8
EBT 116
Less: Tax @ 33.2175% 38.53
EAT 74.47
The expansion programme is estimated to cost Rs. 200 crore. If this is financed
through debt, the new rate of debt will be 10% and the P/E Ratio will be 6
times. If the expansion programme is financed through equity, new shares can
be sold getting Rs. 25 per share and the P/E Ratio will be 7 times. The
expansion will generate additional sales of Rs. 600 crore with return of 10% on
sales before interest and tax. Suggest which form of financing should it choose?
07
OR
Q.5 (a) Explain meaning of Dividend as per Section 2(22)(a) to 2(22)(e). What is tax
treatment for them? 07
(b) Enlist Any Five permissible deductions u/s 80C to 80U. Explain Any Two of
them. 07
**********
1
Seat No.: _____ Enrolment No.______
GUJARAT TECHNOLOGICAL UNIVERSITY M.B.A. Sem. – III - Examination –June- 2011
Subject code :( 830201)
Subject Name: Corporate Taxation & Financial Planning Date:09/06/2011 Time: 02.30 pm – 05.30 pm
Total Marks: 70
Instructions: 1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 ABC Ltd., an Indian company, submits the following particulars relevant for
the assessment year 2010:
Particulars Rs. Particulars Rs.
Salary to Staff 5,24,000 Gross profit 23,52,000
Income tax 20,000
Expenses on issue of shares
for setting up a new show
room at Delhi
40,000
Expenses on raising a long
term loan for setting up a new
show room at Mumbai
60,000
Interest on public deposits 20,000
Capital expenditure for
promotion of family planning
among employees
8,000
Legal expenses for filing
income – tax appeals before
Delhi High Court
11,000
Reserve for losses 16,000
Reserve for payment of fines
and penalty
6,000
Reserve for bad and doubtful
debts
400
Maintenance expenses for car 12,000
Bad debts written off 3,600
Depreciation to be written off:
Plant and machinery
Car
42,000
6,000
Office expenses 8,000
Rent & repairs 28,000
Sundry expenses 2,43,000
Net profit 13,04,000
Total 23,52,000 23,52,000
14
2
Other information:
1. Car is partly used for official purposes and partly for personal purposes of
manager. In the past 50 percent of car expenditure is disallowed.
2. Sundry expenses include payment of an advertisement bill to a person
who has substantial interest in company. The payment is excessive to the
extent of Rs. 9,800.
3. Office expenses include an expenditure of Rs. 4,000 which is paid in
cash.
4. Sundry expenses include an expenditure of Rs. 40,100 which is paid by a
bearer cheque.
5. Depreciation on machinery as per income tax provisions is Rs.
18,000
6. On March 10, 2010, the company pays Rs. 1, 80,000 to National
Laboratory for carrying an approved scientific research programme in
natural science. The payment is not recorded in the above P & L Account.
7. Sundry expenses included royalty payment of Rs. 50,000 to a resident on
which tax is deducted at source on March 31, 2010 and paid to the
government on September 5, 2010 (i.e. after the time limit given under
section 200(1).
Determine the taxable income and tax liability of the company for the
assessment year 2010-11.
Q.2 (a) Distinguish between : (Any Two)
(i) Tax avoidance and Tax evasion
(ii) Tax planning and Tax management
(iii) Real ownership and Beneficial ownership
07
(b) X furnishes the following particulars of his income earned during the
previous year relevant to the assessment year 2010-11
Rs.
1. Income on German Development Bonds 72,000
(one-sixth is received in India)
2. Income from agriculture in Pakistan, received 6,82,000
there but later on Rs. 1,72,000 as remitted to
to India
3. Interest from property in USA received outside 6,80,000
India (Rs. 1,84,000 is used in Canada for
meeting the education expenses of X’s
son is in Canada and Rs. 4,96,000 is
later on remitted to India )
4. Income earned from business in Iran which 8,10,000
controlled from New Delhi (Rs. 1,40,000 is
received in India)
5. Dividend paid by an Indian company on May 10, 3,91,600
2009 but received out side India
6. Pasted untaxed profit of 2006-07 brought to 4,20,000
India in May,2009
7. Profit from the business in New Delhi and 1,84,000
managed from out side India (60 % of profit
is received out side India)
8. Profits on sale of building in India but received 37,48,000
in Nepal
9. Pension from a formal employer in India 4,30,000
received in Iran
07
3
10. Gift in foreign currency from a friend received 1,60,000
in India on September 6, 2009
Find out the gross total income of X if he is
(i) Resident and ordinarily resident in India
(ii) Resident but not ordinarily resident in India
(iii) Non- resident in India
For the assessment year 2010-11
OR
(b) X joined a company at Ajmer (population 24 lakh) on June 1,2009 and was
paid the following emoluments and allowed perquisites as under:
Emoluments :
Basic pay Rs. 25,000 per month
Dearness allowance Rs. 10,000 per month
Bonus Rs. 50,000 per month
Perquisites:
i. Furnished accommodation owned by the employer and provided free
of cost.
ii. Value of furniture therein Rs. 3,00,000
iii. Motor car owned by company (with engine cubic capacity less than
1.6 litres) along with chauffeur for official and personal use.
iv. Sweeper salary paid by company Rs. 1,500 per month.
v. Watchman salary paid by company
vi. Rs. 1,500 per month.
vii. Educational facility for two children provided free of cost. The
school owned and maintained by the company.
viii. Interest free loan of Rs. 5.00,000 given on October 1, 2009 for
purchase of a house repayable within five years. No repayment
was made during the year (SBI landing rate is 9.75%).
ix. Interest free loan of Rs.50, 000 for purchase of computer to be used
for education purpose given on January 1, 2010. No repayment
was made during the year (SBI landing rate is 11.75%)
x. Corporate membership of a club. The initial fee of Rs. 1, 00,000 was
paid by the company. X paid the bills for his use of club
facilities.
You are required to compute the income of X under the head
“salaries” in respect of assessment year 2010-11.
07
Q.3 (a) Mr. Jay furnish the following details for the year ending March 31, 2010 ,
assumed that figures given below are computed and arrived after
considering eligible deductions.
Particulars Rs.
Salary Income 4,50,000
Income(loss) from House property
House – 1 1,40,000
House – 2 (Self-occupied) (7,05,000)
House – 3 1,15,000
Profit or Gain from Business or Profession
Pharmaceutical business 5,00,000
Electronic business (7,50,000)
Speculation business 3,60,000
07
4
Capital Gains
Long - term capital gain 3,00,000
Short - term capital gain 1,90,000
Long - term capital loss (3,25,000)
Income from other sources
Loss on owning and maintaining race horses (1,50,000)
Interest on securities 2,90,000
Compute total taxable income of Jay.
(b) Explain the concept of Double Taxation Avoidance Agreement (DTAA). 07
OR
Q.3 (a) ABC Ltd. is in process of expansion of programme. It has to make choice
between debt issue and equity issue for its expansion programme. Its current
position is as under.
Particulars Rs. In Crore
Equity share capital 500
( Rs. 10 per share)
10 % loan 200
Reserve & Surplus 300
Total Capital Employed 1,000
Total sales 3,000
Less:
Total costs 2,690
310
Less:
Interest 20
(10 % on 200)
Profit Before Tax 290
Less:
Tax @ 33. 2175 % 96.;33
Profit After Tax 193.67
The expansion programme is estimated to cost Rs. 500 crore. If this is
financed through debt, the new rate of debt will be 10 percent and the price-
earning ratio will be 6 times. If the expansion programme is financed
through equity shares, new shares can be sold @ Rs. 25 per share and price-
earning ratio will be 7 times. The expansion will generate additional sales of
Rs. 1500 crore with return of 10 % on sales before interest and taxes. If
company wants to follow maximizing the market value of its shares, which
form of financing, should it choose?
07
(b) Explain advantages of Limited Liability Partnership (LLP) as compared to
company form of organization
07
Q.4
XYZ Ltd. is considering the purchase of a new machine costing Rs. 1,
20,000 with an expected life of 5 years with salvage value of Rs. 6,000, in
replacement of an old machine purchased 3 years ago for Rs. 30,000 with
expected life of 8 years. The present market value of this old machine is Rs.
70,000. Because of the purchase of new machinery, the annual profits before
depreciation are expected to increase by Rs. 24,000. The relevant
depreciation rate for the machine is 15 percent on written down value basis
14
5
and the tax rate is 33.2175 percent. Assume the after tax cost of capital
(discounting rate) to be 14 percent. Advice the company suitably.
OR
Q.4 (a) R Ltd., is engaged in the business of carriage of goods. On April 1, 2009 it
owns 10 trucks (6 out of which are “heavy goods vehicle”). On May, 16,
2009, one of the heavy goods vehicles is sold by R. Ltd. to purchase a light
goods vehicle on May 25, 2009, which is put to use only from August, 1
2009. Find out the net income of R Ltd. for the assessment year 2010-11
taking in to consideration the following data:
Particulars Rs.
Freight collected 7,75,000
Less:
Operating expenses 5,25,000
Depreciation as per section 32 1,40,000
Other office expenses 65,000
Net Profit 45,000
Other Business Income 55,000
07
(b) Explain Methods of Accounting under income-tax Act 1961. 07
Q.5 (a) XY & Co., a partnership firm, transfers a piece of land situated in Thane
district on August 17, 2009 for Rs.50 lakh. The land purchased on March 6,
1980 for Rs. 1 lakh got registered on April 3, 1983 on payment of stamp
duty of Rs. 20,000.Expenses on land development and construction of
boundary wall incurred in August 1983 where of Rs. 1, 50,000. The charges
for transfer of land paid to the broker where 2.5% of the sale consideration.
Fair market value of the land as on April 1, 1981 was Rs. 1, 50,000.The firm
invested Rs. 30 lakh on December 1, 2009 in the bonds issued by a National
Highways Authority of India redeemable after a period of 48 months.
Compute the amount of capital gain chargeable to tax and amount of
exemption U/S 54EC for the assessment year 2010-11. Cost Inflation Index
for 1981-82 and for 2009-10 is 100 and 632 respectively.
07
(b) Explain implications of Direct Tax Code on Steel Sector. 07
OR
Q.5 (a) Write provisions relating to deduction of tax at source from Salary. 07
(b) X Ltd., is engaged in business of growing and manufacturing tea in India.
During previous year 2008-09, it deposits Rs. 100 lakh in the “special
account” and claim the same as deduction under section 33AB (i.e. 40 % of
the business profit: Rs. 250 lakh). During 2009-10, the company withdraws
Rs. 35 lakh from the “special account” which is utilized as follows :
a. Rs. 25 lakh on December 31, 2009 for the purpose of scheme framed by
the Tea Board ; and
b. Rs. 4 lakh for the other purpose on January 27, 2010.
c. 6 lakh is not utilized up to March 31, 2010.
Find out the amount chargeable to tax for the assessment year 2010-11.
07
*************
Page 1 of 6
Seat No.: ________ Enrolment No.______________
GUJARAT TECHNOLOGICAL UNIVERSITY M.B.A -III
nd SEMESTER–EXAMINATION – MAY/JUNE- 2012
Subject code: 830201 Date: 31/05/2012
Subject Name: Corporate Taxation & Financial Planning (CT&FP)
Time: 02:30 pm – 05:30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) XYZ Ltd. An Indian company furnishes following
particulars for the Assessment Year 2010-2011 compute
Total Income.
Net Profit as per P&L A/c:- Rs.4, 00,000
Additional Information
1. Income Tax debited to P&L A/c Rs.6, 000, out of it
Rs.1, 200 is excessive.
2. During the previous year 2009-2010, the following
payments are made not debited to P&L A/c.
• Rs.7, 000 paid on 5th
May-2009 on A/c of
outstanding custom duty of the previous
year 2008-2009.
• Rs.5, 000 paid on 3rd
January-2010 on A/c.
of outstanding Sales Tax of the previous
year 2008-2009.
3. Copyright of Rs.30, 000 debited to P&L A/c. was
acquired and put to use on 10th
March-2010.
4. Opening stock & Closing stock was respectively
Rs.3, 60, 000 & Rs.4, 50, 000 as per books, it was
found that it has been consistently valued 10%
below cost.
5. Goods of Rs.50, 000 purchased by bearer cheque
from Y Ltd. debited as purchase in P&L A/c.
6. Contribution to a national laboratory for carrying
out approved scientific research qualified for
weighted deduction U/s.35 (2AA) Rs.1, 06, 000
debited to P&L A/c.
7. During the previous year 2009-2010 company pays
Rs.10, 00,000 not debited to P&L A/c. as
compensation to employees on voluntary retirement
under VRS scheme.
07
Page 2 of 6
(b) Find out the Total Income in the cases of X & Y for the
assessment year 2010-2011 both are resident retail traders
at Ahmedabad.
X Y
Sales Turnover 40, 00,000 60, 00,000
Less: Expense
Cost of Goods Sold 35, 00,000 50, 00,000
Depreciation 20,000 30,000
Other Expenses 3, 80,000 8, 20,000
Business Income 1, 00,000 1, 50,000
Other Income 2, 20,000 2, 30,000
PPF Contribution 40,000 50,000
LIC - 60,000
07
Q.2 (a) As on 31-3-2009 the regular workers employed by an
industrial undertaking were 120. During the previous year
following workers were employed
Causal workman on 5-4-09 10
Workman employed
through contract labor
from 10-5-09
20
Workman employed by
company
• w.e.f 1-5-09
• w.e.f 1-6-09
• w.e.f 15-7-09
• w.e.f 15-10-09
15
5
15
5
Compute the deduction under section 80JJAA if the salary
of each new workman is Rs.2000P.M.
07
(b) Explain Tax planning, Tax avoidance and Tax evasion with
one example of each.
07
OR
(b) State meaning of “Amalgamation” under the Income Tax
Act and conditions for a merger to qualify as
“Amalgamation” for the purpose of Income Tax Act.
07
Q.3 (a) What is regarded as “income” under The Income Tax
Act(any seven points)
07
Page 3 of 6
(b) Find out Gross Total Income of X for assessment year
2010-2011 if he is
• Resident & ordinary resident
• Resident & not ordinary resident
• Non resident
Rs.
Interest on USA
development bonds(two
fifth is received in India)
60, 000
Income from Agriculture
in Australia(Activity is
controlled in Australia)
1, 00,000
Income from business in
Uganda(controlled from
Delhi)
50, 000
Pension from a former
employer in India received
in Bangladesh
30, 000
Profit on sale of building in
India but received in Sri
Lanka
1, 00,000
Gift in foreign currency
from a friend received in
India on 20th
January-2010
80, 000
07
OR
Q.3 (a) State any 7 incomes which do not form part of Total
Income (Tax free incomes).
07
(b) A company wants to appoint marketing manager Mr. X
aged 40 years , it has two options
1. Monthly Salary Rs.30, 000
2. (i) Monthly Salary Rs.15,000
(ii) Employers contribution to RPF Rs.1, 800 P.M.
(iii) Education allowance for 2 children Rs.200
P.M.
(iv) Academic research allowance Rs.2, 000 P.M.
(50% use for conducting research)
(v) Uniform allowance Rs.3000 P.M.(utilize for
purchasing & maintaining uniform for official use)
(vi) Rent free house in Delhi company pays rent at
Rs.5, 000 P.M.
(vii) Medical reimbursement Rs.12, 000 P.A.
(viii) Telephone at residence of employee Rs.9000
P.A.
(ix) Bonus Rs.15, 000 P.A.
Compute tax liability under both option for Assessment
Year 2010-2011 and state which option will be beneficial
to X.
07
Page 4 of 6
Q.4 (a) A & B are minor sons of Mr. X and Mrs. X. Business
income of Mr. X is Rs.3, 50,000 and Mrs. X Rs.5, 00,000.
Income of A & B from stage acting is Rs.60, 000 and
Rs.70, 000 respectively besides interest on company
deposits of A & B (deposit was made out of Income from
acting) is Rs.30, 000 and Rs.1, 000 respectively. A & B
have received following birthday gifts, on 20th
May-2009
gift received by B from his grand father Rs.80,000 and on
14th
September-2009 gift received by A Rs.60, 000 from X
friend and Rs.35, 000 from a relative. Find out the income
of Mr. X, Mrs. X, A and B for Assessment Year 2010-
2011.
07
(b) X purchases a property on 1st April-1976 for Rs.1, 00,000.
He enters into an agreement of the property to A on 1st
November-1983 and receives Rs.10, 000 in advance. A
could not however keep his promise & advance of
Rs.10, 000 given by him is forfeited by X. Later on he gifts
the property to his friend Y on 15th
May-1985. The
following expenses are incurred by X & Y for renewal of
the property.
Cost Rs.
Addition of two Rooms by X during
1978-1979
25, 000
Addition of first floor by X during
1983-1984
40, 000
Addition of second floor by Y during
1990-1991
1, 15,000
Fair Market Value of the property on 1st April-1981 is
Rs1, 20,000.
Y enters into agreement of sale the property for
Rs.8, 50,000 to B on 1st April-1993 after receiving an
advance of Rs.50, 000. B could not pay the balance within
and Y forfeits the advance. Y ultimately finds a buyer C to
whom the property is transferred for Rs.10, 75,000 on
1stDecember-2009. Compute the capital gain chargeable to
tax in the hands of Y for Assessment Year 2010-2011.
Previous Year Cost Inflation Index
1981-82 100
1983-84 116
1985-86 133
1990-91 182
2009-10 632
07
OR
Page 5 of 6
Q.4 (a) X a business man of Delhi furnishes the following
information for the Assessment Year 2010-2011.
Rs.
Income from house
property(computed)
2, 50,000
Business Profit (before
claiming following
deduction)
2, 40,000
Current Year depreciation
allowance
1,10,000
Unabsorbed depreciation
allowance of previous
years
• 2003-2004
• 1993-1994
15, 000
5, 000
Unabsorbed Business
losses of the previous years
• 2003-2004
• 1993-1994
10, 000
6, 000
Current Scientific research
expenditure
1, 05,000
Determine his total income for Assessment 2010-2011
07
Q.4 (b) Mr. X aged 45 years has Gross Total Income of Rs.4,
00,000. Compute his total income and tax payable by him
for Assessment year 2010-2011 considering below
payments, investments or deposits.
1. LIC premium on life of his married daughter
Rs.6,000(Sum assured Rs.20, 000)
2. LIC premium on his own life Rs.2, 700(sum
assured Rs.60, 000) due on 31st march-2010 but
paid on 4th
April-2010.
3. LIC premium on life of dependent sister Rs.9, 000
(sum assured Rs.1, 00,000)
4. LIC premium on life of his Major son Rs.3,
100(sum assured Rs.20, 000)
5. Medical Insurance premium of own & spouse
Rs.12, 000.
6. Tuition fee of his son Rs.15,000
7. Repayment of housing loan installment to LIC
Rs.10, 000.
07
Q.5 (a) State the amendments brought in by the Finance Act 2010
for Assessment year 2011-2012 with respect to below
provisions
1. Limit of turnover or gross receipts for the purpose
of audit of accounts.[Sec.44AB]
2. Limit of turnover for the purpose of presumptive
taxation. [Sec.44AD]
3. Normal rates of income tax in case of individual
being a resident in India who is of the age 65 years
or more at any time during previous year.
07
Page 6 of 6
(b) A company wants to raise capital of Rs.20, 00,000 for a
project where earning before interest and tax shall be 30%
of the capital employed. The company can raise debt fund
at 11% P.A. Suggest which of the following three
alternatives should it opt for
A. Rs.20, 00,000 to be raised by equity capital.
B. Rs.15, 00,000 by equity and Rs.5, 00,000 by loans.
C. Rs.5, 00,000 by equity and Rs.15,00,000 by loans
Assume the company shall distribute the entire amount of
profit as dividend. Assume effective Tax rate for company
at 30.90% and effective dividend Tax rate 16.995%
07
OR
Q.5 (a) Discuss the implications of Direct Tax code on various
Indian Sectors in brief.
07
(b) Decide which one is a better alternative lease or buy in
following situation
Tax rate 30.90%
Cost of capital 14%
Depreciation Rate(Income Tax) 15%
Lease Cost Rs.34, 000 P.A for 5 Years(per Rs.1, 00,000)
Present Value of Rs1 discounted at 14% is as follow
Year 1 2 3 4 5
0.877 0.769 0.675 0.592 0.519
Assume cost of asset Rs.1, 00,000 with salvage value of
Rs.1, 000 and there is no capital gain Income Tax liability.
07
*************
1
Seat No.: _____ Enrolment No.______
GUJARAT TECHNOLOGICAL UNIVERSITY M.B.A. Sem. – III - Examination –June- 2011
Subject code: 830002
Subject Name: Legal Aspects of Business Date:18/06/2011 Time: 02.30 pm – 05.30 pm
Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) “Contract is an agreement enforceable by law”. Discuss the statement and
describe the essentials of a valid contract.
07
(b) “A company is an artificial person created by law, having a separate entity
with a perpetual succession and a common seal.” Discuss the above
statement and explain the characteristics of a company.
07
Q.2 (a) What do you mean by contract of guarantee? In which circumstances a
surety may be discharged from his liability.
07
(b) Discuss in brief the remedies available to an aggrieved party in case of
breach of the contract.
07
OR
(b) Define Agency. What are the various ways in which the relation of agency
arises?
07
Q.3 (a) Briefly state the provisions of the Companies Act, 1956 regarding the
mode of appointment of the directors of a company.
07
(b) What is a negotiable instrument? Describe the different types of
negotiable instruments in brief
07
OR
Q.3 (a) “A contract without consideration is void”. Comment on the statement and
give its exceptions.
07
(b) What are the penalties prescribed in the Negotiable Instruments Act in case
of dishonor of cheque for insufficiency of funds in the account of the
person issuing the cheque?
07
Q.4 (a) Distinguish between condition and warranty. State the circumstances under
which a condition can be waived and treated as warranty.
07
(b) Where and how can a complaint be made by consumer? State the
jurisdiction of the various redressal agencies in this regard.
07
OR
Q.4 (a) When is a seller of goods deemed to be an unpaid seller? What are his
rights against (I) the goods, and (II) the buyer personally?
07
(b) How is Controller or Certifying Authority appointed? What are his
functions under Information Technology Act, 2000?
07
Q.5 (a) Define Intellectual Property. Explain the major types of protections
provided by Intellectual Property Rights.
07
(b) Explain the rules made by Central Government for save the Environment. 07
OR
Q.5 (a) What are the acts which are not infringement of copyright? 07
(b) “Environment Protection Act is an Umbrella Law for Environment
Protection.” justify the Statement.
07
*************
1
Seat No.: __________ Enrolment No._____________
GUJARAT TECHNOLOGICAL UNIVERSITY MBA Semester –III Examination Dec. - 2011
Subject code: 830002 Date: 08/12/2011
Subject Name: Legal Aspects of Business
Time: 10.30 am – 01.30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) What are essentials of a valid acceptance? 07
(b) What is free consent? Under what circumstances is consent said to be
free?
07
Q.2 (a) How is a contract discharged? 07
(b) Explain the essentials of the contract of guarantee. 07
OR
(b) What is Indemnity? What are the essentials and rights of an indemnity
holder?
07
Q.3 (a) What are the rights of an Agent? 07
(b) Distinguish between Sale and Agreement to sell. 07
OR
Q.3 (a) Under the Consumer Protection Act, explain who is not a
Consumer?
07
(b) What are the essential elements of 'Bill of Exchange'? 07
Q.4 (a) What are the rights of a 'Holder in Due Course'? 07
(b) What are the rights of a member or shareholder of a company? 07 OR
Q.4 (a) What are the rules to be observed before allotting shares? 07
(b) Discuss the types of Meetings. 07
Q.5 (a) Under the Environment Protection Act, discuss the powers of the central
government.
07
(b) A battery-operated travel lamp was being sold by a shop. It was claimed that the battery would last for 10 hours. The claim was valid, but the light of the
bulb appeared harsh and piercing to the eyes. The buyer wants to return the
bulb to the shop and claim his money back. Decide.
07
OR
Q.5 (a) Under the IT Act, who is a Certifying Authority and how is it regulated? 07
(b) Ashish bought an electric iron from a shop. His wife, Varsha was using the iron, when in the first use itself, the coil melted and gave her a shock. Varsha
had to be hospitalized. Can Ashish return back the iron and claim his money
back? Can Varsha demand compensation for injury? Can Ashish demand
compensation for his wife?
07
*************
1
Seat No.: _____ Enrolment No.______
GUJARAT TECHNOLOGICAL UNIVERSITY MBA. Sem-III Regular Examination January 2011
Subject code: 830002
Subject Name: Legal Aspects of Business Date: 04 / 01 /2011 Time: 10.30 am – 01.00 pm
Total Marks: 70
Instructions: 1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) A contract is not voidable merely because it was caused by one of the parties to it
being under a mistake as to a matter of fact.- Explain the statement giving
illustrations
07
(b) All contracts are agreements but all agreements are not contracts – Explain 07
Q.2 (a) Explain who is an unpaid seller. State his rights 07
(b) State what is the real test for agency. Also state the provisions relating to sub
agents
07
OR
(b) Explain briefly the provisions relating the prevention of deterioration of quality of
air under the Air (protection) Act.
07
Q.3 (a) A contracted to pay B Rs. 1 lakh on a specified day through a promissory note in
lieu of the goods sold to him. A did not pay the money on the appointed day. B in
consequence of not receiving the money on that day is unable to pay his debts and
is totally ruined. What damages if any would you award
07
(b) Define Managing Director, and state the statutory provisions regarding his
appointment and remuneration
07
OR
Q.3 (a) A draws a cheque in favour of B. A’s clerk forges B’s endorsement and negotiates
the cheque to C, who takes it in good faith and for value. C receives payment on
the cheque. Discuss the rights of A and C.
07
(b) Explain who can become a Certifying Authority under the Information Technology
Act 2000. What is the scope of activities of the same?
07
Q.4 (a) Explain the scope of different consumer dispute redressal agencies 07
(b) “Copyright is protection in Form and not in Idea” – Discuss 07
OR
Q.4 (a) Explain the criteria for patentability set under the Indian Patents Act 07
(b) You are a banker. A new customer has asked you to explain the effect of the
following crossing on cheques: (a) two parallel lines across the cheques with words
’&co.’, (b) the same as in (a) with the addition of the words ‘not negotiable’. Give
him a clear explaination
07
Q.5 (a) X co. Ltd., wants to make a contract with a partnership Firm. Four of the five
directors of the company are partners of such partnership. Can the contract be
executed? If yes then how?
07
2
(b) A, B and C as sureties for D enter into three several bonds, each in a different
penalty of A Rs.1000, B in that of Rs. 2000 and C in that of Rs.4000 conditioned
for D’s duly accounting to E. D makes a default to the extent of Rs. 4000. State
the liability of A, B and C
07
OR
Q.5 (a) The shareholders at an annual general meeting passed a resolution for the payment
of dividend at a rate higher than that recommended by the Board of Directors.
Examine the validity of the resolution
07
(b) A person saw a Plasma Television in the showcase of a shop. A label below the
television mentioned the price as Rs.45000. He had been looking for that model of
television for a long time. He approached the shop to one such television.
However he was told that the shop did not have that model in stock. The
shopkeeper also said that he could not promise him one later either, as the
manufacturing company of that television was facing financial difficulties and it
was being closed down. The person insisted that he had a right to buy the one kept
in the showcase. - comment
07
*************
1
Seat No.: ________ Enrolment No.______________
GUJARAT TECHNOLOGICAL UNIVERSITY M.B.A -III
nd SEMESTER–EXAMINATION – MAY/JUNE- 2012
Subject code: 830002 Date: 30/05/2012
Subject Name: Legal Aspects of Business (LAB)
Time: 02:30 pm – 05:30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Define Contract. What are the essential elements of a Valid Contract? 07
(b) What are the various modes to create an Agency? 07
Q.2 (a) What are the provisions of companies act, 1956 for conversion of;
1. A private company into public company and
2. A public company into private company.
07
(b) Differentiate Sales and Agreement to sale. 07
OR
(b) Describe the salient features of the Consumer Protection Act, 1986.
Explain its objectives.
07
Q.3 (a) What do you mean by Consent? Thoroughly discuss the elements
influencing free consent of the parties.
07
(b) Who is surety? What are the rights of surety? 07
OR
Q.3 (a) Define Discharge of Contract. In what circumstances the contract can
be concluded or Discharged?
07
(b) What are the remedies available on breach of contract? 07
Q.4 (a) What are the salient features of a negotiable instrument? 07
(b) Define unpaid seller. What are the rights of unpaid seller? 07
OR
Q.4 (a) What is Prospectus? Describe its contents. 07
(b) What are the objectives of IT Act 2000? 07
Q.5 (a) What is revocation of patent? Which are the grounds for revocation of a
patent?
07
(b) The Environment Act is enacted with what objectives? 07
OR
Q.5 (a) Define Patent. Explain the procedure for registration of patent. 07
(b) What are the powers of central government to protect and improve the
Environment?
07
*************
1
Seat No.: __________ Enrolment No._____________
GUJARAT TECHNOLOGICAL UNIVERSITY MBA Semester –III Examination Dec. - 2011
Subject code: 830202 Date: 15/12/2011
Subject Name: Management of Financial Services
Time: 10.30 am – 01.30 pm Total Marks: 70 Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Describe the functions of Indian Financial System. 07
(b) How the role of money market is different from capital market? 07
Q.2 (a) Name the different types of financial institutions prevailing in the
Indian financial market and explain their roles.
07
(b) Describe the Role of Reserve Bank of India in the development of
Banking and Non Banking Financial Institutions.
07
OR
(b) What are the challenges before Indian Financial System in Globalised
Economy?
07
Q.3 (a) Demonstrate the functions of Merchant Banker related to issue
management.
07
(b) What are the advantages and disadvantages of Leasing? 07
OR
Q.3 (a) Describe the characteristics of venture capital financing? 07
(b) What is bill discounting and how it is different from bills purchasing? 07
Q.4 (a) What is credit rating and how it is useful for credit organizations? 07
(b) Define Depository and explain its functions. 07 OR
Q.4 (a) What are the prescribed code of conducts for Stock Brokers? 07
(b) How the factoring is different from forfeiting? 07
Q.5 (a) What is the role of Mutual Funds in Stock Market? 07
(b) Give details about the important features of Hire Purchase Agreement
and also explain how it is different from Lease?
07
OR
Q.5 (a) Commodities Market in India is not developed in comparison to
financial market – Comment on the statement.
07
(b) Describe the Role of IRDA in the development of Insurance Services
in India.
07
*************
1
Seat No.: _____ Enrolment No.______
GUJARAT TECHNOLOGICAL UNIVERSITY MBA. Sem-III Regular Examination January 2011
Subject code: 830202
Subject Name: Management of Financial Services Date: 07 /01 /2011 Time: 10.30 am – 01.00 pm
Total Marks: 70
Instructions: 1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Discuss the Indian Financial System, giving the various components of the
Financial System.
07
(b) Throw some light on the history of banking in India, giving an overview of the
banking structure in India.
07
Q.2 (a) Explain Hire-Purchase finance giving its characteristics. How is it different
from installment payment and lease financing?
07
(b) Explain the Income-Tax considerations which have a bearing on lease
transactions for the lessor and for the lessee.
07
OR
(b) What is leasing? Discuss the various types of lease. 07
Q.3 (a) Discuss the phases of growth of Mutual Fund in India and the benefits of
investing in a Mutual Fund.
07
(b) “With the help of international factoring an exporter can explore new markets”.
– Discuss the statement giving the benefits of international factoring. Also,
describe with the help of a flowchart an international factoring transaction.
07
OR
Q.3 (a) Discuss the process of securitization and the obstacles in the development of
securitization in India.
07
(b) “Intermediaries are a vital link between the insurer and the insured”. Mention
the various intermediaries in the insurance industry and the role played by them.
07
Q.4 (a) “Merchant bankers play a very important role in issue management activity”.-
Give the major obligations & responsibilities of a merchant banker.
07
(b) Discuss the stipulations with regard to the pricing of issues. 07 OR
Q.4 (a) What is Book-building? Explain the briefly the process of issue of shares
through book-building method.
07
(b) Mention the major features of an issue advertisement. 07
Q.5 (a) Explain the term Depositories. Give the reasons for setting up depository in
India. Discuss the services and benefits provided by the depository system.
07
(b) Describe the credit rating methodology generally used by the credit rating
agency.
07
OR
Q.5 (a) Discuss the functions and services provided by National Securities Depositories
Ltd (NSDL)
07
(b) Write a note on Credit Rating Information Services of India Ltd (CRISIL). 07 *************
1
Seat No. ___________ Enrolment No. ________
GUJARAT TECHNOLOGICAL UNIVERSITY
M.B.A. Sem. – III - Examination –June- 2011
Subject Code : 830202
Subject Name : Management of Financial Services Date:11/06/2011 Time: 02.30 pm – 05.30 pm Total Marks: 70
Instructions :
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Discuss post Narsinhman Committee (One) reforms taken place in financial
markets in India.
(b) Discuss the main functions and role of Reserve Bank of India.
Q.2 (a) A has total sales of Rs. 3.20 crores and its average collection period is 90 days.
Past experience indicates that bad debt losses are 1.5% on sales. The expenditure
incurred by the firm in administering its receivables collection efforts are Rs.
5,00,000. A factor is prepared to buy the firms receivables by charging 2%
commission. The factor will pay advance on receivables to the firm after with
holding interest @ 18% p.a. and 10% on reserve.
Calculate effective cost of factoring to the firm. (Assume number of days in year
as 360. Also assume that bad debts will be borne by factor)
(b) Explain ‘Repos’ and ‘Reserve Repos’.
OR
(b) Explain eligibility norms of SEBI for bringing IPO (Initial Public Offer)
Q.3 (a) Briefly discuss the various functions performed by merchant banker.
(b) Discuss advantages of lease to the lessee.
OR
Q.3 (a) Define commercial bills. Briefly discuss advantages of bill discounting.
(b) What are the benefits of credit rating to Investors.
Q.4 (a) Explain in detail commercial paper alongwith regulatory guidelines.
(b) Briefly state the advantages of investing through mutual funds to the investors.
OR
(07)
(07)
(07)
(07)
(07)
(07)
(07)
(07)
(07)
(07)
(07)
2
(a) Briefly explain code of conduct for brokers as specified by SEBI.
(b) Explain basic features of short selling and securities lending and borrowing
scheme.
Q.5 (a) Explain the concept of ‘Reverse Mortgage’.
(b) Explain the provisions of SEBI for exercising ‘Green shoe option’.
OR
(a) Explain the stages of venture capital financing including Due Diligence and
Exist routes.
(b) Briefly explain ‘Reverse Book Building’.
**********
(07)
(07)
(07)
(07)
(07)
(07)
1
Seat No.: ________ Enrolment No.______________
GUJARAT TECHNOLOGICAL UNIVERSITY M.B.A -III
nd SEMESTER–EXAMINATION – MAY/JUNE- 2012
Subject code: 2830202 Date: 01/06/2012
Subject Name: Management of Financial Services (MFS)
Time: 02:30 pm – 05:30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) “The organization of the Indian Financial System in the post 1991
period has undergone drastic and dramatic transformation” – Express
your views on this statement.
07
(b) Explain briefly role and functions of Reserve Bank of India. 07
Q.2 (a) “Merchant Bankers are considered as sponsor of capital issues” –
Justify this statement considering the role of merchant bankers in new
issue management.
07
(b) Define Venture Capital Finance. Also discuss the various stages of
venture capital financing.
07
OR
(b) State and explain various types of mutual fund schemes with their
innovative features.
07
Q.3 (a) Define Lease Finance? Briefly discuss types of lease. 07
(b) Write a short note on importance of Money Market. 07
OR
Q.3 (a) Define Factoring and Forfeiting. Explain types of factoring. 07
(b) Discuss features of Hire Purchase Finance. Compare Lease Finance
and Hire Purchase Finance.
07
Q.4 (a) Define Letter of Credit. Explain various types of letter of credit. 07
(b) “Credit rating has emerged as one of the very beneficial service for the
prospective investors and the issuers as well” – Give your comments.
07
OR
Q.4 (a) Define Plastic Money. Discuss merits and demerits of Plastic Money. 07
(b) Discuss role and functions of SEBI. 07
Q.5 (a) “Financial service supervision is very crucial aspect to ensure healthy
and orderly growth of financial system in India” – Give your
comments.
07
(b) Write a note on Bills Discounting. 07
OR
Q.5 (a) What do you understand by Book Building? Explain process of Book
Building.
07
(b) Explain Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio
(SLR) prescribed by RBI for all commercial banks as a part of
financial service supervision.
07
*************
1
Seat No.: ________ Enrolment No.______________
GUJARAT TECHNOLOGICAL UNIVERSITY M.B.A -III
nd SEMESTER–EXAMINATION – MAY/JUNE- 2012
Subject code: 830202 Date: 01/06/2012
Subject Name: Management of Financial Services (MFS)
Time: 02:30 pm – 05:30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions & give suitable examples wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) What is factoring? Which are the types of factoring services available in India? 07
(b) Explain NSDL and CDSL. What is the process and benefits of depositary
system? 07
Q.2 (a) Write a detailed note on Harshad Mehta and Ketan Parekh scam. 07
(b) Highlight the major roles of a central bank in financial system. Also explain
how does the monetary policy of RBI helps in it. 07
OR
(b) Explain the functions of NHB. What guidelines the HFI needs to follow? 07
Q.3 (a) Explain the clearing and settlement procedure of NSE. 07
(b) What are the restrictions on accepting of deposits from public by the Non
Banking Financial Institutions? 07
OR
Q.3 (a) Explain about the money market instruments that traded in the Indian money
market? 07
(b) What is the role of debt market in the capital market? Who are the participants
in the debt market? 07
Q.4 (a) Explain the operations, participants and different schemes under Mutual
Funds. 07
(b) How Bill discounting help as a short term instrument of financing? Which are
the different types of bills? 07
OR
Q.4 (a) What is book building process? Write about the Green Shoe Option. What is
full, partial and reverse green shoe? 07
(b) Which are the different stages of finance available under Venture Financing
option? 07
Q.5 (a) Write in brief on following:
- IRDA
- NABARD
07
(b) Which are the major credit rating agencies in India? Explain in brief. 07
OR
Q.5 (a) Explain different methodology to calculate index with an appropriate example. 07
(b) How to price the IPO? Write about fixed and free price regime of IPO. 07
*************
Page 1 of 3
Seat No.: ________ Enrolment No.______________
GUJARAT TECHNOLOGICAL UNIVERSITY M.B.A -III
nd SEMESTER–EXAMINATION – MAY/JUNE- 2012
Subject code: 2830203 Date: 02/06/2012
Subject Name: Security Analysis and Portfolio Management (SAPM)
Time: 02:30 pm – 05:30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Explain following Terms:
Margin Trading, Stop-loss order, Preference Share, Mutual Fund, Circuit Breaker,
Short Sell, Rolling Settlement
07
(b) The returns of two assets under four possible states of economy are given below:
State of Economy Probability Return on Asset 1 Return on Asset 2
1 0.20 -5% 10%
2 0.30 15% 12%
3 0.40 18% 14%
4 0.10 22% 18%
07
i) Find the standard deviation of the return on asset 1 and asset 2.
ii) Find the covariance between the returns on assets 1 and asset 2.
iii) Find the coefficient of correlation between the returns on both the assets.
Q.2 (a) Reliance Industries earned the following returns over a five year period: R1 = 0.20,
R2 = -0.10, R3 = 0.18, R4 = 0.12 and R5 = 0.20.
Calculate: (a) arithmetic mean return (b) geometric mean return (c) cumulative
wealth index (d) standard deviation of returns
07
(b) What is risk? Explain different kind of risk associated with investments in detail. 07
OR
(b) Discuss following theories: Expectations Theory, Liquidity Preference Theory,
Preferred Habitat Theory
07
Q.3 (a) Explain Efficient Market Hypothesis in detail. 07
(b) Complete the balance sheet and sales data using the financial data given below:
Acid-test ratio = 1.2
Debt/Equity ratio = 0.6
Days’ sales outstanding in accounts receivable = 40 days (360 days per year)
Total Assets turnover ratio = 1.5
Gross Profit Margin = 20%
Inventory turnover ratio = 5
Balance Sheet
Equity Capital 50,000 Plant & Equipment ?
Retained Earnings 60,000 Inventories ?
Debt ? Accounts Receivables ?
- - Cash ?
Total ? Total ?
Sales ?
Cost of Goods Sold ?
07
Page 2 of 3
OR
Q.3 (a) Select an industry of your choice and do the industry analysis in present economic
scenario.
07
(b) Define Technical Analysis. What is the difference between technical analysis and
fundamental analysis? Explain different continuation and reversal patterns.
07
Q.4 (a) Given below is the expected returns on two stocks for particular market returns:
Market Return Aggressive Stock Defensive Stock
5% -5% 10%
25% 40% 18%
i) What are the betas of two stocks?
ii) What is the expected return on each stock if the market return is equally
likely to be 5% and 25%?
iii) What is SML if the risk free rate is 10%
iv) Find alpha for both the stocks.
07
(b) Explain Arbitrage Pricing Model. Compare it with CAPM. 07 OR
Q.4 (a) The following information is available:
Expected return for the market = 14%
Standard deviation of market return = 20%
Risk free rate = 6%
Correlation coefficient between stock A and the market = 0.7
Correlation coefficient between stock B and the market = 0.8
Standard Deviation for stock A = 24%
Standard Deviation for stock B = 32%
i) Calculate beta for both the stocks.
ii) Calculate required rate of return for each stock.
07
(b) Explain Security Market Line using CAPM theory. Also, explain assumptions of
CAPM.
07
Q.5 (a) Following bond has been considered by you as a part of your fixed income
portfolio:
Coupon Rate: 10%
Yield to Maturity: 10%
Maturity: 10 years
i) Find duration of the bond.
ii) Why the duration of bond is less than its maturity?
iii) What will be the effect of the following changes on the duration of bond:
(1) Coupon rate is 7% rather than 10%
(2) YTM is 13% rather than 10%
(3) Maturity period 8 years rather than 10 years
Consider one change at a time.
07
(b) Discuss key points of active and passive portfolio strategies. Describe portfolio
rebalancing and portfolio upgrading in the context of portfolio revision.
07
OR
Q.5 (a) Rs.1000 par value bond with annual coupon of 10% has a remaining maturity of
4 years. The bond is presently selling for Rs.1020. The reinvestment rate
applicable to the future cash inflows of the bond is 9% p.a. What will be the
realised YTM?
07
Page 3 of 3
(b) Consider the following information for three mutual funds A, B and C and the
market.
Mean Return (%) Standard Deviation (%) Beta
A 15 20 0.90
B 17 24 1.10
C 19 27 1.20
Market 16 20 1.00
The mean risk free rate = 10%
Calculate Sharpe measure, Jensen measure and Treynor measure for the three
mutual funds and the market index.
07
*************
1
Seat No.: __________ Enrolment No._____________
GUJARAT TECHNOLOGICAL UNIVERSITY MBA Semester –III Examination Dec. - 2011
Subject code: 830203 Date: 17/12/2011
Subject Name: Security Analysis and Portfolio Management (SAPM)
Time: 10.30 am – 01.30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Explain the Elliott Wave theory. 07
(b) "No Investment Decisions are made without calculating risk." Do
you agree? As an Investment Manager of a firm, discuss the various
investment avenues available for investment with risk involved in
each of them.
07
Q.2 (a) How is Markowitz model useful in portfolio selection? 07
(b) A stock costing Rs.120 pays no dividends. The possible prices that
the stock might sell for at the end of the year and the probability of
each are:
(a) What is the expected return?
(b) What is the standard deviation of the returns?
Possible
Prices (Rs)
Probability
115
120
125
130
135
140
0.1
0.1
0.2
0.3
0.2
0.1
07
OR
(b) Following data are available for two security portfolio, find the
minimum variance portfolio. Also calculate the return of the
portfolio.
Security Return Standard
deviation
Correlation between C and
D
C
D
26.9
17.5
22.3
51.0
- 0.12
07
Q.3 (a) Zero coupons bonds are excellent vehicles for immunizing a
portfolio. Do you agree or disagree? Why?
07
(b) Face value of a bond is Rs.1000, YTM = 6%, and coupon rate is
3.5%. What is its present value if its maturity period is 10 years?
07
OR
Q.3 (a) Differentiate between call and put options. What are rights and
obligations of the holders of long and short positions in them?
07
2
(b) You are given two bonds to choose from namely Zero Coupon Bond
(ZCB) of 5 years and 20 years and your target
Duration is 10 years. How much do you allocate to each Bond to
achieve your target duration?
07
Q.4 (a) The stock of Taksha Ltd. is expected to pay cash dividend for three
years from now and it will be at 25% of its earnings. The company’s
cost of equity is 16% and its ending P/E is 18. Its current earnings
per share is Rs.3 and its earning is expected to grow at rate of 10%
per year. What should be the value of stock that he is willing to pay
for this stock, if he is willing to hold the stock for 4 years? No
dividend will be paid in the first two years.
07
(b) Compare and contrast Capital Market Line (CML) and Security
Market Line (SML).
07
OR
Q.4 (a) Define investment. What are the characteristics of investment? 07
(b) The Mansi corporation has a required rate of return of 16% and its
current dividend is Rs 3 per share. If the current price of Mansi’s
stock is Rs 55 per share, what is the growth rate of its dividends?
07
Q.5 (a) What do you mean by Asset Management Company? As an investor
which points you take care of while choosing the Mutual Fund?
07
(b) Two portfolios are having the following characteristics:
Observed returns Beta Residual variance
Portfolio A 0.18 2.0 0.03
Portfolio B 0.12 1.5 0.00
07
The risk-free rate is 0.07. The return on the market portfolio is 0.15.
The standard deviation of the market is 0.06. Compute Sharpe Index
and Treynor Index for the portfolio A and B.
OR
Q.5 (a) Critically examine the basic assumptions of formula plans and
comment on their validity in the Indian Context.
07
(b) With a risk-free rate of 12% and with the market portfolio having an
expected return of 22% with a standard deviation of 10%. What is
the sharp Index for portfolio X, with a mean of 16% and a standard
deviation of 20%? For portfolio Y, having a return of 22% and a
standard deviation of 18%? Would you rather be in the market
portfolio or one of the other two portfolios?
07
*************
1
Seat No.: _____ Enrolment No.______
GUJARAT TECHNOLOGICAL UNIVERSITY MBA. Sem-III Regular Examination January 2011
Subject code: 830203
Subject Name: Security Analysis and Portfolio Management Date: 08 /01 /2011 Time: 10.30 am – 01.00 pm
Total Marks: 70
Instructions: 1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) What is risk? What are the various types of risk involved in investment decision? 07
(b) What is Technical Analysis? Explain various continuation and reversal patterns
for technical analysis.
07
Q.2 (a) Explain the CAPM with the concept of systematic risk and also state its
underlying assumptions.
07
(b) The following data are available for Infosys and HLL
Infosys HLL
Standard deviation 16.68% 33.21%
Expected return 13.90% 21.54%
Correlation coefficient 0.43
Find out the minimum variance portfolio weight for Infosys and HLL. Also find out the
expected return and variance of portfolio.
07
OR
(b) Your portfolio consist of three stocks A, B, and C with the weight of 25%, 32%
and 43% respectively with expected return of 18% and S.D. of 28%. The T-bill
rate is 8%. Your clients choose to invest 70% of his portfolio in your portfolio
fund and 30% in T-bill. What is the expected return and SD of your client’s
portfolio? What are the investment proportions of your client’s overall portfolio
(A, B, C stocks and T-bill)? What is the reward to variability ratio (slope) of your
portfolio and your client’s portfolio?
07
Q.3 (a) The YTM on 1 year Zero Coupon Bond is currently 7%; the YTM on 2 year zeros is
8%. The treasury plans to issue a 2-year maturity coupon bond, paying coupons once
per year with a coupon rate of 9%. The face value of the bond is 100.
1) At what price will the bond sell?
2) What will the YTM on the bond be?
3) If the expectations theory of the yield curve is correct, what is the market
expectation of the price that the bond will sell for next year?
4) Recalculate your above answer if you believe in the liquidity preference theory and
you believe that the liquidity premium is 1%
07
(b) What is Duration? Explain the eight rules of Duration. 07
OR
Q.3 (a) Find the duration of a 6% coupon bond making annual coupon payments if it has 3 years until maturity and has a YTM of 6%. What is the duration if the YTM is 10%?
07
(b) What is Options? Explain the different types of options with their pay off profiles. 07
2
Q.4 (a) An analyst wants to evaluate portfolio X, consisting entirely of equity shares, using both Treynor and Sharpe measures of portfolio performance. The following table provides
the annual average rate of return for portfolio X and market portfolio (BSE) and T-bill
during the past eight years
Rate of Return Standard Deviation Beta
Portfolio X 10% 18% 0.60
BSE 12% 13% 1.00
T-Bills 06% N/A N/A
a. Calculate the Treynor and Sharpe measures for both portfolio X and BSE. Briefly
explain whether portfolio X underperformed, equal or outperformed BSE on a risk
adjusted basis using both the Treynor and Sharpe measures.
b. Based on the performance of the portfolio X relative to the BSE calculated as above,
briefly explain the reasons for conflicting measures when using the Treynor versus
Sharpe measures
07
(b) Explain the various forms of efficient market using random walk theory 07 OR
Q.4 (a) The following information is available for Alpha and Beta.
Alpha Beta
Expected ROE 14% 12%
Estimated EPS 2.00 1.65
Estimated DPS 1.00 1.00
Current Market Price 27.00 25.00
Market capitalization rate 10% 10%
Answer the following questions:
1. What is the expected dividend pay-out ratio?
2. What are the expected growth rates of each?
3. What is the intrinsic value of each share?
4. In which, if either, of the two shares would you choose to invest?
07
(b) What is Mutual Fund? What is Asset Management Company? Discuss the different
types of mutual funds schemes in India 07
Q.5 (a) Choose an Industry and identify the factors that will determine its performance in next
three years 07
(b) What is an Investment? Discuss the various marketable and non marketable
investment avenues available to investors.
07
OR
Q.5 (a) The current market price of share of XYZ Ltd. is Rs. 10. The expected EPS is Rs. 2. The company has dividend payout ratio of 50%. The remaining is invested in projects that
earns 20% rate of return per year. This situation is expected to continue forever.
a) Assuming the current market price reflects the intrinsic value as computed using
the constant growth DDM, what is the expected rate of return by investors.
b) By how much does its value exceed what it would be if all earning were paid as
dividends and nothing were reinvested.
c) If company cuts its payout ratio to 25%, what would happen to its share price?
07
(b) The following information is available for one company. (Rs. in Lakh)
Particulars 2009 2010 Particulars 2009 2010
Revenue 542 979 Fixed Assets 41 70
Operating Income 38 76 Total Assets 245 291
Depreciation 3 9 Working Capital 123 157
Interest 3 0 Debt 16 0
Income Tax 13 37 Equity 159 220
Calculate each of the following components of ROE as per Du Pont for 2009 and 2010.
1. Operating Margin 2. Asset Turnover 3. Interest Burden 4. Financial Leverage and
5. Income Tax Rate
Briefly discuss the change in asset turnover and financial leverage on the change in
ROE from 2009 to 2010
07
*************
1
Seat No.: _____ Enrolment No.______
GUJARAT TECHNOLOGICAL UNIVERSITY M.B.A. Sem. – III - Examination –June- 2011
Subject code: 830203
Subject Name: Security Analysis and Portfolio Management Date:14/06/2011 Time: 02.30 pm – 05.30 pm
Total Marks: 70
Instructions: 1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Define Investment. Explain different Investment Alternatives. 07
(b) Discuss why international diversification reduces portfolio risk.
Specifically, why would you expect low correlation in the rates of return
for domestic and foreign securities?
07
Q.2 (a) Briefly Explain types of Market order. 07
(b) The following are the monthly rates of return for Rally Software Corp. and
for Carry Electric during a six-month period.
Month Rally Software Carry Electric
1 -0.04 0.07
2 0.06 -0.02
3 -0.07 -0.10
4 0.12 0.15
5 -0.02 -0.06
6 0.05 0.02
Compute the following:
a. Expected monthly rate of return [E(Ri)] for each stock
b. Standard deviation of returns for each stock
c. The covariance between the rates of return
d. The correlation coefficient between the rates of return
What level of correlation did you expect? How did your expectations
compare with the computed correlation? Would these two stocks offer a
good chance for diversification? Why or why not?
07
OR
(b) Explain the shape of the efficient frontier. 07
Q.3 (a) You are considering two assets with the following characteristics:
E(R1) = 0.15 σ1 = 0.10 W1 = 0.5
E(R2) = 0.20 σ2 = 0.20 W2 = 0.5
Compute the mean and standard deviation of two portfolios if r1,2 = 0.40
and –0.60, respectively. Plot the two portfolios on a risk-return graph and
briefly explain the results.
07
(b) The capital asset pricing model (CAPM) contends that there is systematic
and unsystematic risk for an individual security. Which is the relevant risk
variable and why is it relevant? Why is the other risk variable not relevant?
07
2
OR
Q.3 (a) General Can Company’s (GCC) latest annual dividend of Rs. 1.25 a share
was paid yesterday and maintained its historic 7 percent annual rate of
growth. You plan to purchase the stock today because you believe that the
dividend growth rate will increase to 8 percent for the next three years and
the selling price of the stock will be Rs. 40 per share at the end of that
time.
a. How much should you be willing to pay for the GCC stock if you
require a 12 percent return?
b. What is the maximum price you should be willing to pay for the
GCC stock if you believe that the 8 percent growth rate can be
maintained indefinitely and you require a 12 percent return?
c. If the 8 percent rate of growth is achieved, what will the price be at
the end of Year 3, assuming the conditions in Part b?
07
(b) Explain the EIC Framework and its implications. 07
Q.4 (a) Explain the difference between Forward and Future Contracts. 07
(b) Why would you expect a relationship between economic activity and
stock price movements?
07
OR
Q.4 (a) You strongly believe that the price of Bright Corp. stock will rise
substantially from its current level of Rs.137, and you are considering
buying shares in the company. You currently have Rs. 13,700 to invest. As
an alternative to purchasing the stock itself, you are also considering
buying call options on Bright’s stock that expire in three months and have
an exercise price of Rs. 140. These call options cost Rs. 10 each.
a. Compare and contrast the size of the potential payoff and the risk
involved in each of these alternatives.
b. Calculate the three-month rate of return on both strategies assuming
that at the option expiration date Bright’s stock price has (1) increased to
Rs. 155 or (2) decreased to Rs. 135.
c. At what stock price level will the person who sells you the Bright
Corp. call option break even? Can you determine the maximum loss that
the call option seller may suffer, assuming that he does not already own
Bright Corp. stock?
07
(b) What do you mean by Efficient Market Hypothesis, Also Explain the
forms of Market Efficiency.
07
Q.5 (a) An analyst wants to evaluate Portfolio X, consisting entirely of Indian
common stocks, using both the Treynor and Sharpe measures of portfolio
performance. The following table provides the average annual rate of
return for Portfolio X, the market portfolio (as measured by the BSE
Sensex), and Indian Treasury bills (T-bills) during the past eight years.
Particulars
Annual Average
Rate of Return
Standard Deviation of
Return Beta
Portfolio X 10% 18% 0.6
BSE Sensex 12% 13% 1
T-bills 6% n/a n/a
n/a = not applicable
07
3
a. Calculate both the Treynor measure and the Sharpe measure for both
Portfolio X and the Sensex. Briefly explain whether Portfolio X
underperformed, equaled, or outperformed the Sensex on a risk-adjusted
basis using both the Treynor measure and the Sharpe measure.
b. Based on the performance of Portfolio X relative to the Sensex
calculated in Part a, briefly explain the reason for the conflicting results
when using the Treynor measure versus the Sharpe measure.
(b) Technical Analysts believe that one can use past price changes to predict
future price changes. How do they justify this belief?
07
OR
Q.5 (a) Describe the Dow Theory and its three components. Which component is
most important? What is the reason for an intermediate reversal?
07
(b) The following portfolios are being considered for investment. During the
period under consideration, RFR = 0.07.
Portfolio Return Beta σi
P 0.15 1 0.05
Q 0.2 1.5 0.1
R 0.1 0.6 0.03
S 0.17 1.1 0.06
Market 0.13 1 0.04
a. Compute the Sharpe measure for each portfolio and the market
portfolio.
b. Compute the Treynor measure for each portfolio and the market
portfolio.
c. Rank the portfolios using each measure, explaining the cause for any
differences you find in the rankings.
07
*************
1
Seat No.: ________ Enrolment No.______________
GUJARAT TECHNOLOGICAL UNIVERSITY M.B.A -III
nd SEMESTER–EXAMINATION – MAY/JUNE- 2012
Subject code: 830203 Date: 02/06/2012
Subject Name: Security Analysis & Portfolio Management (SAPM)
Time: 02:30 pm – 05:30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) A security analyst is responsible for making recommendations to clients about
buying and selling stocks and making other investment decisions. What are the
factors that should be taken into account while evaluating investment
worthiness of a company? Discuss them briefly.
07
(b) The Efficient Market Hypothesis states that no one can earn above normal
returns consistently by using Technical Analysis or Fundamental Analysis. If
this is true then Security Analysis is a fruitless attempt. What are your views
on this? Discuss.
07
Q.2 (a) As a rational investor what factors you would consider while taking
investment decisions.
07
(b) Calculate the expected return and the standard deviation of returns for a stock
having the following probability distribution of returns.
POSSIBLE RETURNS (IN %) PROBABILITY OF
OCCURRENCE
-25 0.05
-10 0.10
0 0.10
15 0.15
20 0.25
30 0.20
35 0.15
07
OR
(b) Explain the following terms:
1. Support and Resistance
2. MACD
3. ROC
4. Short Selling
07
Q.3 (a) Consider two bonds A and B. They have following characteristics.
Bond-A Bond-B
Face Value Rs.100 Rs.100
Coupon Rate 14% 14%
Term to maturity 4 years 7 years
Current market price Rs.100 Rs.100
Coupon payments Annually Annually
(i). What is YTM of Bonds A and B. If the market interest rates fall by 1
percentage, what would be the new market price of the bonds?
(ii). What is the percentage change in the price of two bonds? What did
you notice regarding the percentage price change in case of bonds A
and B identical in all respects except term to maturity?
07
2
(b) Call Options are said to be “At the money”, “In the money” and “Out of
money” depending on whether the exercise price is equal to, less than or
greater than the current market price of the stock. In case of put options the
opposite of this is true. Explain when a trader realizes profits in case of call as
well as a put option with the help of examples. Ignore transaction costs
07
OR
Q.3 (a) Calculate duration of the following bond
Face value : Rs. 1000
Coupon rate : 10% p.a.
Maturity period : 5 years
Market YTM : 11%
07
(b) A stock is currently selling for Rs. 60. The call option on the stock exercisable
a year from now is available at an exercise price of Rs. 55. The stock can rise
by 35%, and it can fall by 30%. The risk free rate of interest is 12 percent.
What is the value of the call option?
07
Q.4 (a) Given the following variance-covariance matrix for three securities, as well as
the percentage of the portfolio that each security comprises. You are required
to calculate the portfolio’s standard deviation.
Security A B C Proportion of
investment
A 425 -190 120 0.35
B -190 320 205 0.25
C 120 205 175 0.40
07
(b) Describe the procedure developed by Markowitz for choosing the optimal
portfolio of risky assets. What are the problems encountered while using
Markowitz model?
07
OR
Q.4 (a) Explain Capital Asset Pricing Model with its assumptions. 07
(b) Describe the anatomy of Sharpe’s single index model 07
Q.5 (a) Calculate Sharpe Ratio, Treynor Ratio and Jensen Ratio from the following
information pertaining to three mutual fund portfolios:
Mutual fund portfolios
Particulars X Y Z
Beta 1.10 0.80 1.80
Return (%) 14.50 11.25 19.75
Standard deviation (%) 20 17.50 26.30
Assume that the risk free rate of return on govt. security is 6 percent and the
market return is 12 percent.
07
(b) Discuss the role of different entities in a mutual fund operation. 07
OR
Q.5 (a) Write a detailed note on Fama’s Net Selectivity Measure. 07
(b) What is an exchange traded fund? How is it constructed? 07
*************
Page 1 of 3
Seat No.: ________ Enrolment No.______________
GUJARAT TECHNOLOGICAL UNIVERSITY M.B.A -III
nd SEMESTER–EXAMINATION – MAY/JUNE- 2012
Subject code: 2830201 Date: 31/05/2012
Subject Name: Strategic Financial Management (SFM)
Time: 02:30 pm – 05:30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) ‘Strategic Financial Planning is subject to the various macro
and micro environmental factors’. Elucidate.
07
(b) Konark Ltd. has to make a choice between debt issue and equity
issue for its expansion programme. Its current position is as
follows:
Particulars Rs.
5% Debt 2,00,000
Equity Share Capital(Rs. 10 per
share) 5,00,000
Reserves & Surplus 3,00,000
Total Capitalisation 10,00,000
Sales 30,00,000
Total Cost 26,90,000
EBIT 3,10,000
Interest 10,000
EBT 3,00,000
Income Tax @ 35% 1,05,000
07
The expansion programme is estimated to cost Rs. 5,00,000. If
it is financed through debt, the rate of interest on the new debt
will be 7% and the price-earnings ratio will be 6. If the
expansion programme is through equity, new shares can be sold
@ Rs. 12.50 per share and the price-earning ratio will be 7.the
expansion will generate additional sales of Rs. 15,00,000 with a
return of 10% on sales before interest and taxes.
If the company is to follow a policy of maximising the market
value of the shares, which form of financing should it choose?
Q.2 (a) Explain the significance of operating and financial leverage
analysis for a financial executive in corporate profit and
financial structure planning.
07
(b) Raj Ltd. is having shares in branded portion as well as
unbranded portion. From the following data calculate brand
value of the company:
Branded Revenue Rs. 500 per unit
07
Page 2 of 3
Unbranded Revenue Rs. 120 per unit
Branded Cost Rs. 350 per unit
Unbranded Cost Rs. 100 per unit
Research & Development Rs. 20,00,000
Branded Products 1,00,000 units
Unbranded Products 40,000 units
Tax Rate 39.55%
Capitalization factor 18% OR
(b) Define the terms: ‘Risk’ and ‘Uncertainty’. What is Risk
Management? Discuss the steps for application of Risk
Management in Project Management.
07
Q.3 (a) What does it mean by Corporate Restructuring? Discuss the
techniques adopted in corporate restructuring.
07
(b) Nigam Ltd. Produces a product in bulk of 40,000 units and
incurs a loss of Rs. 40,000. The variable cost is Rs. 32 and
fixed cost is Rs. 1,20,000. The company has estimated its
demand as follows:
Demand (Rs.) 40,000 48,000 56,000 64,000 72,000
Probability 0.10 0.15 0.20 0.30 0.25
What is the probability that company will incur loss?
What is the probability that company will make profit of Rs.
24.000?
07
OR
Q.3 (a) Write a note on: Project Management Information System. 07
(b) Define ‘Financial Forecasting’. Briefly discuss the techniques
of financial forecasting.
07
Q.4 (a) Define ‘Sick Industrial Company’. Discuss Univariate Model
and Multiple Discriminant Analysis for prediction of industrial
sickness?
07
(b) HPL Ltd. is a levered company with a single project i.e.
Project-P in hand. The equity has a beta 1.2 and debt has a beta
0.9. The project cost is Rs. 1,20,00,000 financed by a
combination of Rs. 72,00,000 debt and Rs. 48,00,000 equity.
The risk free rate of return is 10% and expected market rate of
return is 18%. You are required to calculate beta of the
company in situations: (1) No tax world and (2) In tax world,
assuming corporate tax is 40%.
07
OR
Q.4 (a) ‘An analysis of the magnitude and stability of cash flows
relative to fixed charges and it is extremely important in
determining an appropriate capital structure.’ Comment
07
(b) How do you ascertain the value of share under Capital Asset
Pricing Model?
07
Q.5 (a) Discuss the impact of liberalization and globalization on
project planning.
07
(b) Discuss Decision Tree Analysis and Simulation Modelling as 07
Page 3 of 3
risk evaluation technique in capital budgeting.
OR
Q.5 (a) Baghban Ltd. provides you the following detail, you are
requested to find the value of the company:
2,000, 9% Preference Share of Rs. 100 each Rs. 2,00,000
50,000 Equity Share of Rs. 10 each,
Rs. 8 per share paid up Rs. 4,00,000
Expected profit p.a. before tax Rs. 2,18,000
Rate of tax 40%
Transfer to General Reserve every year 20% of profit
Normal Rate of earning 15%
07
(b) Distinguish: Gordon’s Growth Valuation Model and Walter’s
Valuation Model.
07
*************
1
Seat No.: __________ Enrolment No._____________
GUJARAT TECHNOLOGICAL UNIVERSITY MBA Semester –III Examination Dec. - 2011
Subject code: 830001 Date: 05/12/2011
Subject Name: Strategic Management
Time: 10.30 am – 01.30 pm Total Marks: 70 Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Differentiate between vision, mission and purpose with suitable
examples. 07
(b) In the current scenario, which model is more relevant for generating
above average returns, The I/O model or the resource-based model or
both? Why?
07
Q.2 (a) Differentiate between resources, capabilities and core competencies with
examples. Also discuss the four criteria of sustainable competitive
advantage.
07
(b) Discuss the prominent applications of the internet in the value chain. 07
OR
(b) What is the challenge of analyzing the internal environment? Which
conditions affect managerial decisions about resources, capabilities and
core competencies?
07
Q.3 (a) Discuss different types of business-level strategies with suitable
examples. 07
(b) Why do organizations diversify? Which is better, low-levels, moderate or
high-levels of diversification? Give examples to substantiate your
arguments.
07
OR
Q.3 (a) Differentiate between mergers, acquisitions and takeovers. Also discuss
reasons and problems for acquisitions. 07
(b) What are the different modes of global market entry? Give suitable
examples. 07
Q.4 (a) Write short notes on:
1. Transnational strategy
2. Strategic network
3. Leveraged buyouts
4. Balanced scorecard
07
(b) Discuss key strategic leadership actions with suitable examples. 07 OR
Q.4 (a) What is the relationship between strategy and structure? In what scenario
is a multidivisional structure appropriate? 07
(b) What is organizational culture? How can strategic leaders manage an
effective organization culture? Give examples. 07
Q.5 (a) What are organizational controls? Why are strategic controls and
financial controls important aspects of the strategic management process? 07
(b) Write short notes on: 07
2
1. Corporate governance
2. Ethics in organizations
3. Corporate social responsibility
4. Incremental innovation
OR
Q.5 (a) Discuss the nature of corporate governance in emerging economies like
India with suitable example/s. 07
(b) How can corporate governance foster ethical strategic decisions and
behaviours on part of managers as agents? 07
*************
Seat No.: _____ Enrolment No.______
GUJARAT TECHNOLOGICAL UNIVERSITY MBA. Sem-III Regular Examination January 2011
Subject code: 830001 Subject Name: Strategic Management Date: 03 /01 /2011 Time: 10.30 am – 01.00 pm
Total Marks: 70
Instructions: 1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) Define Vision, Mission and Purpose, and discuss their importance in Strategic
Management Process.
07
(b) “Ethics are the foundation stone of building an organization”. Explain citing an
example of a successful national or multi-national organization like TATAs,
Siemens, L & T etc.
07
Q.2 (a) Explain Porter’s Five Force Model with application in an organization of your
choice.
07
(b) Company ‘A’ targets to achieve Above Average Returns, and their top
management is in dilemma to select either Input-Output Model or Resource-
based Model. As a Manager, which Model would you recommend Company ‘A’
and Why?
07
OR
(b) What are the tangible and intangible resources? Why as a decision maker, it is
important to understand the differences between both?
07
Q.3 (a) What are capabilities of a firm? What must firms do to create capabilities? 07
(b) What are the four criteria used to determine which of a firm’s capabilities are
‘core competencies’? Explain with the help of a Table.
07
OR
Q.3 (a) Explain the ‘Value Chain Analysis’ and its application in a large Retail business
like Big Bazaar, Wall Mart, D-Mart etc.
07
(b) “SWOT Analysis is equally vital for Owners, Directors and Managers”. Explain
in detail giving an example of a company or your choice.
07
Q.4 (a) Explain Business Level Strategies in brief. 07
(b) Define in brief various strategies namely Diversification, Strategic Alliance, Joint
Ventures, Mergers and Acquisitions.
07
OR
Q.4 (a) Why are acquisition strategies popular amongst CEOs of many large Indian
companies as well as SMEs?
07
(b) Explain International Business / Corporate Level Strategies. 07
Q.5 (a) What is the effect of Strategic Leadership on determining firm’s strategic
direction?
07
(b) You wish to implement ‘Balance Score Card’ in your new organization to have
better financial controls and achieve 50% higher performance in the year 2011-12.
Explain this concept.
07
OR
Q.5 (a) “Corporate Governance is essential to manage the relationship among
stakeholders and to control the performance of an organization”. Discuss giving an
example of a company of your choice.
07
(b) “No successful company can grow without fulfilling its Corporate Social
Responsibility”. Discuss giving an example of Dell, Boeing, TATA, Reliance,
ESSAR or any listed Indian company.
07
*************
1
Seat No.: _____ Enrolment No.______
GUJARAT TECHNOLOGICAL UNIVERSITY M.B.A. Sem. – III - Examination –June- 2011
Subject code: 830001
Subject Name: Strategic Management Date:03/06/2011 Time: 02.30 pm – 05.30 pm
Total Marks: 70
Instructions: 1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) i.) Who are various stakeholders in a company ? How stakeholders’
relationship could be source of competitive advantage for a company ?
Explain.
04
ii) Explain the concept of ‘ value ‘and ‘value activities’ in brief 03
(b) AXIS Bank started its operations with corporate assets being the main
focus area . But , AXIS Bank brought shift in strategy in FY 99 . From the
case study of AXIS Bank , answer the following questions in detail .
i. Why the bank did bring shift in strategy ?
ii. What was the strategic shift AXIS Bank brought about ?
iii. What were various constituent sub-strategies of broad differentiation
that the Bank followed ?
07
Q.2 (a) Varina Nissen joined Manpower Australia and New Zealand as Managing
Director in 2003 . When Nissan joined Manpower , the company was facing
a number of significant challenges . Nissan undertook several initiatives in
strategy formulation and its execution . Based on the case study of
Manpower – Australia , answer the following questions :
( i) What are strategic themes identified and strategic initiatives proposed ?
(ii) Why Balance Score Card tool was chosen by Nissan as the strategy
implementation tool ?
(iii) State the measures under the theme of “ Customer Perspective “of
Manpower Australia’s Recruiting & Staffing Solution (R & SS ) Score Card
2004
07
(b) .i. Explain brief various components of external environment of business . 03
ii) What do you understand by ‘ Core Competence “ ? Explain the criteria for
‘ Core Competence ‘ . Illustrate it with reference to ‘ consumer goods ‘
sector
04
OR
(b) What do you understand by ‘ business ethics ‘ ? Explain brief the concepts
related to ethics under schools of ‘ ethical universalism ‘ and ‘ ethical
relativism ‘ . Cite examples .
07
Q.3 (a) i) Explain the concept of I/O Model and assumptions of I/O Model . 03
ii) “ Competitive scope can have a powerful effect on competitive advantage ,
because it shapes the configuration and economies of the value chain “ Critically
examine
04
(b) What do you understand by ‘ cost leadership strategy ‘ ? How it is
implemented through each of five forces ? What are competitive risks of
cost leadership strategy ? Explain in brief citing examples
07
OR
2
Q.3 (a) What are various components of action agenda for implementing a strategy
by a corporate ? Explain detail . 07
(b) Discuss in detail of guidelines to be followed in designing proper incentive
compensation system . 07
Q.4 (a) What are vision and mission ? What is their value for the strategic
management process ? Illustrate your answer with reference to Mc Donald
and Ford Motor company
07
(b) What is the criteria of sustainable competitive advantage ? How companies
like HUL or Tata Steel or Hero Honda could achieve sustainable advantage
? Explain
07
OR
Q.4 (a) What are various levels of diversification ? What are various reasons for
diversification ? 07
(b) What is a company’s social responsibility strategy ? Why the exercise of
social responsibility is good business ? Give at least 3 Indian corporate
examples as exemplary corporate citizens of India .
07
Q.5 (a) Explain in detail of five forces of Michael Porter with suitable examples 07
(b) What do you understand by ‘ Cost Effectiveness ‘ ? What are critical success
factors that change over time ? Explain in brief 07
OR
Q.5 (a) Define ‘ strategic leadership ‘ and explain the role of top level managers . 07
(b) “ Tata Steel is one of the most socially responsible corporates in India .
“ . Justify with facts and figures . 07
*************