IIBM Exam paper:Financial Services: contact us for answers at assignmentssolution@gmail.com

Examination Paper: Banking and Financial Services Management
5
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Financial Services
Section A: Objective Type (30 marks)
•This section consists of Multiple Choices/Fill in the blanks/True-False & Short Answer type
questions.
•Answer all the questions.
•Part One questions carries 1 mark each & Part Two questions carries 5 marks each.
Part One:
Multiple Choices:
1. NBFS stands for …………………………………………………………………………
2. ALCO is a decision making unit responsible for balance sheet planning from risk return
perspective. (T/F)
3. A contract of ‘Indemnity’ is one whereby:
a. A person tries to use the other’s property
b. A person promises to save the other’s property from loss caused.
c. A person tries to trick the property of other for some other person.
d. None of the above
4. The transaction between the lessor and the lessee being a demand sale is called:
a. First sale
b. Second sale
c. Third sale
d. Fourth sale
5. If the net present value of leasing be ‘a’ and net advantage of leasing be ‘b’ then decision
criterion is given by:
a. a/b
b. a+b
c. b/a
d. a-b
6. Break even lease rental BERL has NAL value equal to:
a. 1
b. 2
c. 0
d. 0.5
7. The right under which an unpaid seller who is in possession of the goods is entitled to retain them
until payment of the price is done is termed as ………………………………………
Examination Paper: Banking and Financial Services Management
6
IIBM Institute of Business Management
8. If the no of level investments be ‘t’, total no of level installments be ‘n’ and total charge for
credit be ‘c’ then the interest rebate is given by…………………………………………
9. The practice of discounting accommodation bills is known as ………………………..
10. HUDCO stands for
………………………………………………………………………………………………………
Part Two:
1. What do you understand by “Lock-in period”.
2. Write a short note “Hybrid Debt Capital Instruments”.
3. What do you understand by “Bipartite Lease”?
4. What is “Suit for Quantum Meruit”?
END OF SECTION A
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Sunlight Industries Ltd manages its accounts receivables internally by its sales and credit
department. The cost of sales ledger administration stands at Rs 9 crores annually. It supplies
chemicals to heavy industries. These chemicals are used as raw material for further use of is directly
sold to industrial units for consumption. There is good demand for both the types of uses. For the
direct consumers, the company has a credit policy of 2/10, net 30. Past experience of the company
has been that on average 40 per cent of the customers avail of the discount while the balance of the
receivables are collected on average 75 days after the invoice date. Sunlight Industries also has small
dealer networks that sell the chemicals. Bad debts of the company are currently 1.5 per cent of total
sales.
Sunlight Industries finances its investment in debtors through a mix of bank credit and own longterm
funds in the ratio of 60:40. The current cost of bank credit and long-term funds are 12 per cent
and 15 per cent respectively.
There has been a consistent rise in the sales of the company due to its proactive measures in cost
reduction and maintaining good relations with dealers and customers. The projected sales for the
next year are Rs 800 crore, up 15 per cent from last year. Gross profiles have been maintained at a
healthy 22 per cent over the years and are expected to continue in future.
With escalating cost associated with the in-house management of debtors coupled with the need
to unburden the management with the task so as to focus on sales promotion, the CEO of Sunlight
Industries is examining the possibility of outsourcing its factoring service for managing its
Examination Paper: Banking and Financial Services Management
7
IIBM Institute of Business Management
receivables. He assigns the responsibility of Anita Guha, the CFO of Sunlight. Two proposals, the
details of which are given below, are available for Anita’s consideration.
Proposal from Canbank Factors Ltd: The main elements of the proposal are: (i) Guaranteed
payment within 30 days (i) Advance, 88 per cent and 84 per cent for the resource and non-recourse
arrangements respectively (iii) discount charge in advance, 21 per cent for with resource and 22 per
cent without resource (iv) Commission, 4.5 per cent without resources 2.5 per cent and with
resource.
Proposal from Indbank Factors: (i) Guaranteed payment within 30 days (ii) Advance, 84 per cent
with resource and 80 per cent without resource (iii) Discount charge upfront, without resource 21 per
cent and with resource, 20 per cent and (iv) Commission upfront, without resource 3.6 per cent and
with resource 1.8 per cent.
The opinion of the Chief Marketing Manager is that in the context of the factoring arrangement,
his staff would be able to exclusively focus on sales promotion which would result in additional
sales of Rs 75 crores.
Question:
1. The CFO of Sunlight Industries seeks your advice as a financial consultant on the alternative
proposals. What advice would you give? Why? Calculations can be up to one digit only.
Caselet 2
Following are the financial statements for A Ltd and T Ltd for the current financial year. Both firms
operate in the same industry.
BALANCE SHEETS
Particulars Firm A Firm B
Total current assets Rs 14,00,000 Rs 10,00,000
Total fixed assets (net) 10,00,000 5,00,000
_____________ __________
Total assets 24,00,000 15,00,000
_____________ ___________
Equity capital (of Rs 10 each) 10,00,000 8,00,000
Retained earnings 2,00,000 _
14% Long-term debt 5,00,000 3,00,000
Total current liabilities 7,00,000 4,00,000
_____________ ___________
24,00,000 15,00,000
Examination Paper: Banking and Financial Services Management
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IIBM Institute of Business Management
INCOME STATEMENTS
Net sales Rs 34,50,000 Rs 17,00,000
Cost of goods sold 27,60,000 13,60,000
__________ ___________
Gross profit 6,90,000 3,40,000
Operating expenses 2,96,923 1,45,692
Interest 70,000 42,000
__________ ___________
Earnings before taxes (EBT) 3,23,077 1,52,308
Taxes (0.35) 1,13,077 53,308
Earnings after taxes (EAT) 2,10,000 99,000
Additional information: __________________________________
Number of equity shares 1,00,000 80,000
Dividend payment (D/P) ratio 0.40 0.60
Market price per share (MPS) Rs 40 Rs 15
__________________________________
Assume that the two firms are in the process of negotiating a merger through an exchange of equity
shares. You have been asked to assist in establishing equitable exchange terms, and are required to:
(i) Decompose the share prices of both the companies into EPS and P/E components, and also segregate
their EPS figures into return on equity (ROE) and book value of intrinsic value per share (BVPS)
components.
(ii) Estimate future EPS growth rates for each firm.
(iii) Based on expected operating synergies, A Ltd estimates that the intrinsic value of T’s equity share
would be Rs 20 per share on its acquisition. You are required to develop a range of justifiable equity
share exchange ratios that can be offered by A Ltd’s shareholders. Based on your analysis in parts (i)
and (ii), would you expect the negotiated terms to be closer to the upper, or the lower exchange ratio
limits? Why?
(iv) Calculate the post-merger EPS based on an exchange ratio of 0.4 : 1 being offered by A Ltd. Indicate
the immediate EPS accretion or dilution, if any, that will occur for each group of shareholders.
(v) Based on a 0.4 :1 exchange ratio, and assuming that A’s pre-merger P/E ratio will continue after the
merger, estimate the post-merger market price. Show the resulting accretion or dilution in pre-merger
market prices.
END OF SECTION B
Examination Paper: Banking and Financial Services Management
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IIBM Institute of Business Management
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. The Hypothetical Finance Ltd has structured a hire-purchase deal. The required to make a down
payment of 20 per cent of the investment cost. The hire-term is four years with quarterly payment
in advance. The flat rate of interest is 13 per cent. The finance company would charge a frontended
documentation and service fee and allow rebate for prompt payment @ 0.5 per cent and 1
per cent of investment outlay respectively.
Assuming after paying 24th installment, a hirer wishes the purchase option, what is the interest
rebate according to (i) actuarial method, (ii) rule of 78 method and, (iii) SLM?
2. The Hypothetical Finance Ltd (HFL) has structured a hire-purchase deal for the Hypothetical
Industries Ltd (HIL) at a (flat) rate of interest of 13 per cent. The payment would be made in 36
equal monthly installments in arrears. The HIL is required to make a cash down payment of 20
per cent.
Assume that after paying the 24th installment, the HIL wishes to repay the outstanding amount
and purchase the equipment. What is the interest rebate per Rs 1,000 of investment cost,
according to the ERI/IRR method?
END OF SECTION C
S-2-210311

IIBM Exam papers: BPO and KPO management :contact us for answers at assignmentssolution@gmail.com

Examination Paper: BPO Management
IIBM Institute of Business Management 8
IIBM Institute of Business Management
Examination Paper MM.100
BPO and KPO Management
Section A: Objective Type (30 Marks)
•This section consists of Multiple Choices/Fill in the Blanks and Short notes type Questions.
•Answer all the questions.
•Part one carry 1 mark each and Part Two questions carry 4 marks each.
Part One:
1. Manpower can be retained by which of the following technique:
a. Comfort and Care
b. Problem-Solving technique
c. Attention
d. Proper Training
2. Which of the following is not a challenge to the BPO Industry?
a. Data Security
b. Poor Infrastructure
c. Attrition
d. Lack of Identity
3. Pricing technique where a customer pays a flat rate for services is:
a. Variable Pricing
b. Unit Pricing
c. Fixed Pricing
d. Risk/Reward sharing
4. A MIS report that deals in compliance related to quality and timeliness is:
a. Cash Tracker Report
b. Senior Management Report
c. SLA Compliance Report
d. Production Report
5. Off – Shoring means _________________________________.
6. Size, quality, labor cost etc. are categorized into which form of ITES to be outsourced:
a. People Attractiveness
b. Labor Attractiveness
c. Location Attractiveness
d. Quality Attractiveness
7. The risk that include errors in estimating overall time for mitigating is a:
a. Data Security Risk
b. Transition Risk
c. Transactional Risk
Examination Paper: BPO Management
IIBM Institute of Business Management 9
d. Loss of Control Risk
8. Mitigating of Risk means __________________________________________.
9. Which of the following is not a benefit derived from BPO?
a. Improved Accountability
b. Operational Cost Control
c. Improved HR
d. IPR Protection
10. The service that comprises of areas related to the functional operations is:
a. Vertical Service
b. Horizontal Service
c. Diagonal Service
d. Service Focused Service
Part Two:
1. Define the term ‘Emotional Intelligence’.
2. Differentiate between BPO and KPO.
3. Discuss in brief the Web – based Market Research process in the KPO’s.
4. Write a short note on ‘Change Management’.
5. Discuss in brief the problems faced by BPO’s.
Section B: Caselets (40 Marks)
•This section consists of Caselets
•Answer all the questions
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 Words)
Caselet 1
With the mission that reads “To add value to our client’s business by providing cost – effective premium
– quality customer management services and be the preferred vendor for off shored outsourced BPO
services”, Intelenet Global definitely is set to go places. A joint venture between the mighty TATA
Consultancy services (TCS) and the strong Housing development Finance Corporation (HDFC), Intelenet
aims to deliver business processes outsourcing (BPO)solutions to organizations in the US, UK and
Canada. Intelenet’s parentage enables it to deliver scale, infrastructure and business continuity due to its
deep financial strength. TCS brings to Intelenet a vast and rich experience in executing and maintaining
mission – critical projects. TCS’ prowess in technology implementation is unchallenged. And its
knowhow in domain capabilities and a strong project management is invaluable. HDFC is a complete
END OF SECTION A
Examination Paper: BPO Management
IIBM Institute of Business Management 10
financial conglomerate in itself with proven competencies in banking, insurance, mutual funds, asset
management and, of course, its core strengths, mortgage and properties. It brings to Intelenet its
experience in customer management process, back office operations and property management.
Together TCS and HDFC provide Intelenet the tools and resources necessary or effective customer
service in the respective business domains. “Over and above all this, we get to learn and implement the
best practices in the areas of migrating expertise, deploying technology to improve the efficiency of any
project and last but not the least, operational expertise in handling a process,” says Sushil kumar, the
proud CEO of Intelenet. “Also, the goodwill TCS has created outside India, domain expertise (finance)
from HDFC, and of course no anxieties about funding requirements etc, are some other advantages of
belonging to such strong parents. Ours is a domain-led organization, thanks to our strong parents, that
allows us to stand apart,” he adds. “Intelenet’s ability to offer an end-to-end service – from a basic service
to complex task that involves decision making in its main marketing pitch.”
Contract Centre Operation
The contract centre is the most vital part of the company with almost 70 percent of the staff engaged in
this activity. Intelenet caters to several clients from the UK and the USA. Currently, call centre operations
are in the areas of banking & finance, insurance, telecommunications, hospitality, retail and travel. The
4,000 – odd people take almost 5,00,000 to 5,50,,000 calls a day on average making it close to 20 to 180
calls per person per day. A simple order call can take anything between 165 and 240 seconds while a
technical process call takes as high as 10 minutes, while a service level agreement call takes around 9
minutes, according to Shyam Krishnan, Head of Operations. It is important to perform equally well in
each call; since each call is broadly of the same nature, monotony creeps into the job and the fact the
CSAs are constantly bombarded with calls one after the other makes the job highly stressful. Intelenet’s
infrastructure, employee appreciation programme, rewards and certificates signed by CEO himself, Hall
of fame nomination for deserving employees etc are some of the activities conducted regularly to destress
CSAs and keep their motivation level high.
Intelenet has implemented process re-engineering tools and techniques for high efficiency. The
advantages are two- fold: one, the CSA gets a breather for a second that can be used to sip water etc and,
two; the CSA does not have to repeat the greeting to everybody thus reducing some of the monotony of
the job. This has been a formidable achievement for Intelenet.
Training
Training is the most important part of a call centre operation, and given the scale, attrition and ramp-up
plans most of the companies have there are 600 to 650 people under training at any given point in time,
says Sheldon D’Souza, head of Training at Intelenet. Training is usually a 45- day programme with some
minor variations due to nature of process-based training. Training begins with a strong focus on
interpersonal and English-language skills, i.e., the science of language. Trainees are taught to ‘think in
English and then speak in English” as most Indians are used to thinking in their native language and then
speaking in English. This creates some obvious problems, which have to be addressed in the first part of
the training programme.
The next level is customer service training, which mostly involves culture training, rules of courtesy,
politeness and friendliness, sensitization programme – to culture, to individualism, need for privacy etc.
Intelenet believes that history, geography and economy effect culture and hence has introduced a session
called ‘Cause and Effect Analysis Culture’ in all its training programmes. This is absolutely unique in the
BPO industry. This is followed by a programme called ‘Com feel America’. This consists of an
introduction to the basic culture, heritage, mannerisms, style of talking, compulsions, religious affiliations
and sentiments etc of Americans from the East Coast, the West Coast and Central America. The second
level lasts 120 hours.
Level three is process-based training that focuses on the actual process that the trainees will handle after
completion, like insurance, credit cards, and telecom etc. Simulation techniques, actual customer calls for
Examination Paper: BPO Management
IIBM Institute of Business Management 11
testing etc. are some of the tools used for this level of training. How long this takes depends on the depth
of the process – i.e., a simple outbound process can take up to five days while an inbound transaction –
oriented process can require up to 20 days of training.
Then starts the on-the-job training (OJT), which is exposure to actual work. They listen to live calls and
then start taking calls themselves. OJT involves low quantity but high supervision. The OJT programme
is also used to plot the learning curve of the trainee and hence the success, flaws, issues with the training
programme. At every stage of the OJT, there is detailed feedback about the training programme – i.e.,
what are the improvement areas, where changes are required etc. Correlation studies are conducted
between the high scores in training versus high scores in operations. All of this is to improve upon the
training system. Throughout the training programme, teamwork is emphasized and a culture for working
in teams is instilled into the trainees. A salary is paid throughout the training programme at Intelenet.
Trainees, on the successful completion of OJT, join as Customer Service Associates.
Human Resource Management
Human Resource Management is the backbone of any company, especially of a BPO unit due to the
youthful profile of its employees. And to top of it, the nature of work is highly stressful – not just the job
itself, which involves handling customers diligently and caringly, but the erratic hours of work can also
take its toll on the motivation of employees. Employees need to know that they are important for the
organization and Intelenet’s ‘people first’ policy focuses on just that. An example of this policy is the
commissioning of gallops agency to conduct a free and fair survey of Intelenet’s employees – the
problems they face and the issues that bothered them across 12 questions. The recommendations of the
gallops survey were translated into an action plan.
‘Work hard, Play Hard’ is the motto and programmes are arranged to create the fun element that not only
destresses CSAs but motivates them. In the second week of January (2004) Intelenet organized
‘Employee Appreciation Week’. Employee appreciation is a core value building process. The activities
included in the week-long programme were: indoor fun cricket matches, a ‘Mr. and Ms. Intelenet’ awards
night, daily themes and many other interactive sessions, including a raffle to support a charity of
Intelenet’s choice. The various motivational programs include ‘Best Employee Award’, Hall of Fame
nomination, on-the-spot prizes etc.
Trends and Future
The benefits of outsourcing are so immense and the companies are already realizing the cost benefits
without any compromise on quality or time. This makes this wave unstoppable. Resistance from
managers dies down the moment they are convinced of the potential benefits of outsourcing. This makes
future bright and an opportunity to have a long-term career prospects for aspirants in this industry.
Questions:
1. Discuss about the various training programmes offered by Intelenet Global Company.
2. Write a short note on:
•Contract Centre Operation
•Human Resource Management
Examination Paper: BPO Management
IIBM Institute of Business Management 12
Caselet 2
Introduction
Hinduja TMT (HTMT) is the flagship company of the multibillion-dollar Hinduja group with offices in
the US and UK and delivery centres in India and the Philippines. HTMT is a SEI CMM level 4 company
and is ranked at no. 8among the 400-odd BPO providers in India (Source: Nasscom) HTMT has also been
ranked the no.2 healthcare BPO provider in India for employee satisfaction (Source: Dataquest). HTMT
claims to be the country’s first convergence corporation; its vision is to become a ‘scale player’ and
leader in its core information technology business by leveraging the strength of its customer base, breadth
and depth of its service lines and management bandwidth. The Hinduja Group provides a wide range of
products and services in over 50 countries and has over 25000 people working for them worldwide.
The group’s activities are divided into three core areas:
•International trading
•Investment banking
•Global investment
With interests in technology, media and telecom, HTMT has the capacity to offer high-quality, costeffective,
end-to-end solutions or breadth of experience across multiply technology platforms and
verticals to enhance the business of its customer worldwide. This is because of the remarkable advances it
has achieved in modularity through subsidiaries in media and telecommunications, which are designed to
function independently and yet to work together as a whole, coalescing technology.
BPO Arm HTMT
HTMT is a one-stop outsourcing company that can provide IT services and BPO/contact centre services
to customer all under one roof. HTMT’s IT services provides application development & maintenance,
legacy migration services, engineering design services and SAP implementation services. These services
are complemented by HTMT’s BPO services in the area of back office processing – claims processing,
technical help desk support, contact centre services, payroll processing, accounts receivable and accounts
payable services. HTMT offers BPO services for the following domains: insurance, banking & finance,
manufacturing, telecom, FMGC and customer durables.
Disaster Recovery Centre
HTMT has three centers spread over multiply locations in Bangalore, Mumbai, and Philippines to ensure
business continuity. “We realized that India and Philippines can complement each other’s strengths –
India for its non-voice based capability and the Philippines for its voice-based capability. We entered into
a marketing tie-up with a company in the Philippines to get a foothold there and later decided to acquire
the company,” says R. Mohan, president & CEO of HTMT’s IT Division. HTMT has exhaustive
documentation defining the processes and procedures to be adopted in case of relocation due to a disaster
or business interruption. This documentation is part of the quality manual designed by KPMG for ISO
9001:2000. Being an ISO 9000:2000 certified company; the same can be shared with the client on
request.
Activities
Insurance Claiming Process
Outsourcing of insurance claims processing to India and other low- cost destinations is a rapidly growing
segment. Some large insurance companies have started captive centers in India to take advantage of the
cost containment option that India offers while some have preferred to outsource the work to a third-party
BPO service provider. HTMT is by far the largest player in the area of insurance claims processing in
India and is currently working for two Fortune 250 American insurance companies. More than 1,000
Examination Paper: BPO Management
IIBM Institute of Business Management 13
people are working in this activity and it is likely to scale up and double the current strength in the near
future.
Currently HTMT processes claims in the following areas:
•Traditional dental & medical
•Health maintenance organization (HMO)
•Coordination of Benefits (COB).
•Claim resolution processing (CRP)
•Over payment recovery (OPR)
•Paper referral processing (PRP)
•Private provider organization (PPO)
•Claims audit
•Worker’s compensation
•Automobiles
•Property
•Liability
More than 85,000 claims are processed in a single day. The process involves eight stages and the training
programme lasts for almost one year.
Contact Centre Operation
HTMT’s contact centre activity began in 1996 and since then it is growing from strength to strength.
Currently working with US/UK customers in the telecom, consumer durables, financial services and
FMCG areas, it provides services like customer care, provisioning, marketing, technical testing, order
administration, telemarketing, product recall and directory enquiries. With about 1,400 plus agents, this
activity is likely to double in the near future.
Future Plans
HTMT’s future plans for the IT business are:
•Leverage strong domain expertise in insurance and telecom to grow the existing BPO and call
centre business.
•Enter the European market for BPO Business.
•Focus on continuous high-quality execution of current contracts for higher ramp-ups.
•Move up the value chain in the BPO business by tapping synergistic opportunities like high-end
call centre business from the same client.
•Enter new markets and leverage strong discrete manufacturing expertise for software
development and maintenance business.
•Graduate from conventional and collaborative outsourcing to transformational outsourcing.
•Inorganic growth in IT services/IT- enabled services will also be a key growth strategy in the
future.
Questions:
1. Discuss about the various activities performed by Hinduja TMT.
2. Write a short note on:
•Disaster Recovery Centre
•BPO Arm in Hinduja TMT
END OF SECTION B
Examination Paper: BPO Management
IIBM Institute of Business Management 14
Section C: Applied Theory (30 Marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 10 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 Words)
1. Discuss the different strategies that are adopted by the BPO’s to control their Attrition.
2. What are the Pros and Cons of BPO?
3. Write a note on the SWOT Analysis of Indian BPO Industry.
S-2-210311
END OF SECTION C

IIBM Exam papers: International financial management :contact us for answers at assignmentssolution@gmail.com

Examination Paper
22
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
International Financial Management
Section A: Objective Type (30 marks)
•This section consists of Multiple choice & Short Answer type questions.
•Answer all the questions.
•Part One questions carry 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple choices:
1. Maintenance margin money denotes the minimum level to which the margin is allowed to
fall in the sequel of loss, if the balance drops below this, one has to deposit,
a. Initial margin amount
b. Variation margin amount
c. Maintenance margin amount
d. Initial as well as variation margin amount.
2. The two kind of swap in the forward market are
a. Forward swap and reverse swap.
b. Reverse swap and option swap.
c. Forward and option less swap.
d. Forward swap and option swap.
3. International Fisher Effect or generalized version of the Fisher effect is a combination of
a. PPP theory and Fisher’s open proposition.
b. Fisher’s open and closed proposition.
c. PPP theory and Fisher’s closed proposition.
d. None of the above.
4. Exchange rates are quoted as ‘direct’ and ‘indirect’ ,if the direct quote of a country ‘X’
(currency unit ‘a’) with country ‘Y’ (currency unit ‘b’), is “ a 50/ b 20” then the indirect
quote will be
a. b 2.5/ a 1
b. b 0.4/ a 1
c. b 10/ a 1
d. Cannot be calculated.
5. If the investors are risk neutral ie forward prices are equal to the expected spot prices at
delivery then the covariance of marginal rate of substitution and the exchange rate of
contract at delivery is
a. Always unity
b. Zero
c. Infinite
d. Between Zero and unity
Examination Paper
23
IIBM Institute of Business Management
6. In cylinder or tunnel option, the correct option is
a. If the spot rate is lower than the lower strike rate then buyer has to pay lower spot rate.
b. If the spot rate is lower than the lower strike rate then buyer has to pay lower strike rate.
c. If the spot rate is higher than the higher strike rate then buyer has to pay lower strike
rate.
d. If the spot rate is higher than the higher strike rate then buyer has to pay higher strike
rate.
7. The concept of parallel loan says
a. Amount of the loan moves out of the county but it serves the purpose of internal loan
also.
b. Amount of the loan moves out of the county but it serves the purpose of cross border
loan.
c. Amount of the loan moves within the county and it serves the purpose of external loan
only.
d. Amount of the loan moves within the county but it serves the purpose of cross border
loan.
8. According to one of the earliest theory proposed by Hymer on the imperfect market
a. Multinational firm is a typical imperfect market.
b. Multinational firm is a perfect market
c. One should not look for control if want the maximum profit
d. None
9. If the NVP(net present value) from parent’s perspective and from the subsidiary’s
perspective are positive and negative respectively then
a. Project can not be accepted
b. Project shall be accepted
c. Project may be accepted but it is doubtful how far useful for parent unit.
d. Project may be accepted but chance of loss in host country currency will be there.
10. If ‘A’ and ‘B’ are the price elasticity of demand for import and export respectively then
devaluation helps to improve current account balance, only if
a. 2A + B is greater than 1.
b. A - B is equal to 0.
c. A+B is greater than 1.
d. A + B is lesser than 0.
Part Two:
1. Write a note on ‘Fixed Parity System’ for exchange rates.
2. What are Direct & Indirect Quotes of exchange rates?
3. What is ‘Forward Market Hedging’?
4. How could ‘Optimization of Portfolio’ be achieved?
END OF SECTION A
Examination Paper
24
IIBM Institute of Business Management
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Managing Exchange Rate Risk
Mahindra International (India) imported spares of an engine from a US manufacturer for $ 5,000 per
annum at a price of $ 2.5 per piece. The average exchange rate during 2001-02 was Rs. 47.70/$. The
Indian company imported the spares also from a British manufacturer. In fact, it had diversified its
import in view of reducing the risk associated with the supply. The import from the USA was
competitive in view of the fact the same spares imported from the UK was slightly costlier. The
American spares cost Rs. 119.25 per piece, while the British spares cost Rs. 120.00 per piece. In
2002-03, US dollar appreciated to Rs. 48.40 with the result that the cost of American spares turned
higher than the British spares. In the sequel of the appreciation of US dollar, the Indian importer cut
its demand from 2,000 pieces to 500 pieces. The loss to the US exporter was colossal. But at the same
time, the Indian Importer suffered a lot. It had to pay a higher price for the US spares in terms of
rupee. And also, it had to divert its import from the USA to the UK insofar as the pound sterling did
not appreciate during this period. All this happened in the wake of the exchange rate changes.
Questions:
1. Mention the loss borne by the US exporter in the sequel of appreciation of dollar.
2. What strategy the Indian importer needs to follow to hedge the exchange rate risk?
Caselet 2
ABN Amro Bank and Correspondent Banking in India
ABN AMRO bank has emerged as a major correspondent bank owing to a large network. In India, it
operates in six major cities, viz. Baroda, Chennai, Kolkata, Mumbai, New Delhi and Pune. Being a
correspondence bank, its product offerings are found primarily in the area of trade and clearing. It is
doing well in these owing to strong tie-up with local Indian banks reaching 350 centres across the
country. As a result, payments are effected speedily and effectively.
Cash Management
The customized products in the area of cash management include cheques payable at par at all its
branches across the country, apart from traditional collection services, such as collection of
outstation/upcountry cheques drawn on other banks. ABN AMRO is a member of all major clearing
centers in the major financial centers. It has an electronic delivery system and structures multilateral
netting of cash.
Examination Paper
25
IIBM Institute of Business Management
Trade Services
Under trade services, the Bank offers a comprehensive range of products, such as:
1. LC reimbursement
2. Indian rupee trade payments
3. Handling documentary bills for collection
4. Bills negotiation
5. Letter of credit advising
6. Letter of credit confirmation
7. Guarantees
Treasury Services
Treasury services at ABN AMRO Bank (India) are available round-the-clock. Rupee funding at its
treasury desk is provided at competitive rates along with advice on market trends and rates. It
provides also advisory services on the request of financial institutions and corporate in the area of
regulatory, economic and financial matters including depository services.
Questions:
1. Describe the network of ABN AMRO Bank in India.
2. What role does it play for global cash management?
END OF SECTION B
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Crawling peg is the compromise between fixed exchange rate and floating exchange rate
discuss.
2. Is international working capital management more complex than the domestic working
capital management?
END OF SECTION C
J-2-230611

IIBM Exam papers: compensation management :contact us for answers at assignmentssolution@gmail.com

IIBM Institute of Business Management
Examination Paper MM.100
Compensation Management
Section A: Objective Type
Part One:
Multiple Choices

1. A ________ is a hierarchy of jobs to which wage rates have been attached.
a. Wage Level
b. Wage Structure
c. Wage Index
d. Wage Policy

2. It is the wage which is above the minimum wage but below the living wage.
a. Basic wage
b. Overtime
c. Fair wage
d. Compensation

3. It is the process of minimizing the physical and perceptual loads imposed on people engaged in any type of work.
a. Motion Economy
b. Human Engineering
c. Value Analysis
d. Task Identity

4. It is the method which lists frequency of critical behaviors in an employee.
a. Performance Appraisal
b. Performance Matrix
c. 360 degree feedback
d. Management by Objectives

5. A map to illustrate behavioral parameters requires in competent performance is:
a. Competency Mapping
b. Balanced Score Card
c. Behavioral Observation Scale
d. Key Results Areas

6. In this type of team, team members are temporarily assigned some tasks to accomplish:
a. Cross functional Team
b. Hybrid team
c. Process Team
d. Parallel Team
7. The practice of comparing compensation with other competing to offer a competitive pay
package to employees, is refer as:
a. Broadband Policy
b. Bench Marking
c. Retention Policy
d. None of the above
8. Any wage cost not directly connected with the employees’ productive effort, performance
service, is called:
a. Allowances
b. Incentives
c. Fringe Benefits
d. Bonus
9. It is a company’s expenditure spent directly on employees excluding the cost of infrastructure:
a. Basic Salary
b. Cost to company
c. Allowances
d. Bonus
10. Strategy that provides overall guidelines for the organization is refer as:
a. HR Strategy
b. Functional strategy
c. Corporate strategy
d. Operational strategy
Part Two:
1. Discuss the terms ‘wages’ and ‘salary’. What factors determine the wage structure in an industrial
enterprise?
2. Define job design. Briefly explain various technique of job design.
3. What is a balanced Score Card.? What are its different perspectives?
4. Write a short note on 360-degree performance feedback.
END OF SECTION A
Examination Paper: Personnel Management
IIBM Institute of Business Management 8
Section B: Caselets (40 Marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
In 2001, a Chennai- based two- wheeler major introduced a bonus scheme for its employees. Employees
covered under this bonus scheme are evaluated through a three-tier process- (1) meeting production
schedules, 2) maintaining machines, and (3) reducing overtime, scrap and shipping errors. In 2002,
productivity surged, and some employees even added as much as 15 per cent to their paychecks.
The two- wheeler company started facing competition from international players and also was riddled in
patent issues. A court order forced them to stop production of many models, causing significant
manpower restricting successive drop in sales, the company was forced to withdraw the bonus scheme,
and asked employees to be prepared for a financial structure, which would mean a reduction in their
benefits and perks. This message had a highly demoralizing effect on the employees and many efficient
designers and engineers left their jobs to join the competitors. The trade unions also took up the matter as
the workers only faced pay- cut while the senior management remuneration remained unchanged.
A portion of the employee compensation is paid as variable pay, of which bonus is a major part. Other
variable incentives are based on allocated weight age on group target achievement. To rationalize the
compensation cost, the company decided to further switch over to individual performance track record. A
formal announcement to this effect made the workers furious and led to workers protest, resulting in
production loss an a regular basis. The company made it clear to the employees that their behavior would
lead to the closure of the company, which would put them in financial and went on an indefinite strike.
A few months later, the company obtained clearance from the court and the production of all the premium
high- selling brands, which was stopped earlier, could be resumed, as the patent issue was found to be
untenable. The company feels that the whole issue was masterminded by competitors to poach valuable
employees from the company.
Question:
1. Study the case and provide an alternative compensation design, which would redress the problem
faced by the two- wheeler major in Chennai.
Caselet 2
You are a Manager, the Financial Analysis department of Mendelssohn’s Insurance. Your assistant,
Denzil Worsnip, has worked for you two years. He is 24 years of age and joined Mendelssohn’s as an ‘A’
level entrant. He progressed through the support functions, from junior clerk to section head. He showed
such promise that the company sponsored him at evening classes to study for the accounting technicians
exams. He is over half way through this at the moment and is due to take his final exams in 9 months
time.
His aim in joining your team was to use the job as a stepping tone to one of the sales teams. You were not
bothered that Denzil looked on the job in this way a you are all in favor of encouraging people to get on.
Examination Paper: Personnel Management
IIBM Institute of Business Management 9
In nay case, you know it is exceptionally difficult to get onto one of these sales teams, particularly these
days with the company placing so much emphasis on its graduate recruitment. You know he was put out
recently when the Unit Trust team hired a graduate trainee, as he had put a lot of effort into chatting them
up. Nevertheless, Denzil does not accept that the new recruit had an advantage in that he is a qualified
actuary.
Until a few months ago, Denzil had been an above average employee. He was always cheerful,
enthusiastic and willing. He also picked things up quickly. You used to have regular weekly team
meetings. You used to use these meetings to get suggestions on your new procedures. Denzil used to
make an excellent contribution to these meetings; he was always full of ideas. It is a shame that there is
now so little time for these meetings.
You often used to give Denzil some one-off projects to do. He always handled them well and he was
always able to squeeze in the extra work. He was also quite prepared to work late time for these meetings.
You often used to give Denzil some one-off projects to do. He always handled them well and he was
always able to squeeze in the extra work. He was also quite prepared to work late without overtime pay.
In the last few months, he seems to have really changed. The other day, he refused to take on a job you
wanted him to do. You remember that about four months ago, a similar thing happened. He complained
that he had enough to do and could not take on any more and that he was fed up of working every day
until 8’o clock. You were annoyed at this because you felt Denzil could take on the extra work, he would
just have to assess his priorities better. Anyway, it was only additional routine work you wanted him to
do. You knew he was too busy to do ant projects so you were doing this yourself to keep the pressure off
Denzil. As for all the overtime, partly, Denzil does go in for long lunch breaks. Networking he calls it.
The loss of one person has put additional pressure on the team, but you feel you should most of it. The
others just need to find more efficient working practices.
Denzil has also recently taken to being very off-handed to people. You have overheard him several times
being rude, both on the ‘phone and in person’ to people from the business teams who ask him for
information or help. He has been very rude to you too and obviously completely fails to appreciate the
extreme pressure you are under. Last week, for instance, you got your team together to tell them about the
new procedure, you are implementing, Denzil sat there fuming and then started carrying on at you for
having drawn up this new procedure in secret and also claimed the procedure to be unworkable and
pointed out some faults. The faults he mentioned were valid. But they are easily rectifiable. You know
perfectly well that the new procedure is workable and it will save them all considerable time and effort as
it cuts out a layer of admin. Denzil is just being obstructive. Maybe he has girlfriend problem and he is
taking it out on the office?
Questions:
1. Identify aspects of Denzel’s behavior that indicate that he was well-motivated.
2. Identify those actions taken by the Manager that helped to motivate Denzil.
END OF SECTION B
Examination Paper: Personnel Management
IIBM Institute of Business Management 10
Section C: Applied Theory (30 Marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 10 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 Words)
1. What is compensation management? What goals or objectives does it follow?
2. What are some of the challenges which HR managers face in designing a compensation system?
3. What is a fringe benefit? Can it be made a part of an employee benefits plan?
S-2-210311
END OF SECTION C

IIBM Exam papers: Aviation maintenance management :contact us for answers at assignmentssolution@gmail.com

Examination Paper: Aviation Management
6
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Aviation Maintenance Management
Section A: Objective Type (30 marks)
• This section consists of Objective questions & short note questions.
• Answer all the questions.
• Part one questions carry 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. A maintenance check performed approximately every month is known asa.
“C” check
b. “A” check
c. Visual check
d. None of these
2. JAA stands for ______..
3. Establish the rules and procedure for auditing maintenance & engineering facilities for adherence
to safety policy is the responsibility of-:
a. Supervisor
b. Safety manager
c. Employee
d. Company
4. Several visual inspection tasks performed in a specific area of the aircraft isa.
Zonal inspection
b. Non-destructive inspection
c. destructive inspection
d. General visual inspection
5. The probability that an item will perform a required function under specified condition without
failure is known asa.
Reliability
b. Reliability programme
c. Redundancy programme
d. None of these
6. FAA stands for ______.
Examination Paper: Aviation Management
7
IIBM Institute of Business Management
7. Which of the following is the type of documentation?
a. Regulatory documentation
b. Airline generated documentation
c. Manufacturer’s documentation
d. All of the above
8. Which of the following is the element of Reliability programme?
a. Data collection
b. Setting and adjusting alert level
c. Both a & b
d. None of these.
9. Hanger maintenance & line maintenance comes undera.
Technical maintenance
b. Aircraft maintenance
c. Shop maintenance
d. Material maintenance
10. What is the full form of TPPM:
a. Technical policies and procedure maintenance
b. Technical policies and procedure manual
c. Technical policies and procedure module
d. Technical policies and procedure material
Part Two:
1. List the steps to selecting a computer system for airline maintenance.
2. What are the types of reliability in aviation industry?
3. Write short note on ‘Maintenance overhaul shops’,
4. What is technical publication and list the function of technical publication?
END OF SECTION A
Examination Paper: Aviation Management
8
IIBM Institute of Business Management
Section B: Case lets (40 Marks)
• This section consists of Case lets.
• Answer all the questions.
• Each Caselet carries 20 marks.
• Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
The government nationalized the airlines in 1953, with enactment of Air Corporation Act. Assets of nine
existing air companies were transferred to the two new corporations Air India International and the Indian
Airlines. After 40 years, in 1994 Air Corporations Act was repealed ending the monopoly of the national
air corporation and enabling entry of private operators.
The liberalization in civil aviation industry began in 1986 with the introduction of Air Taxi system to
boost development of tourism. Though there were several restrictions relating to seat capacity, airports,
timing and fare, the scheme was liberalized over a period of time. Even the fare was totally deregulated,
allowing air operators to change any fare.
With Open Sky Policy many private operators began operations in the domestic sector. The carriage
increased from a modest 15,000 passengers in 1990 to more than 0.4 million in 1992.Of the total of 12.23
million passengers carried on the domestic sector, private carriers accounted for about 5.7 million
passengers. The civil aviation industry got a major boost with the announcement of airport Infrastructure
Policy in November, 1997 which envisaged development of international hubs and regional hubs to
provide a hub and spoke arrangement connecting all airports. Infrastructure development of airport was
opened up for public and private participation. It allowed 74% foreign equity participation in the airport
infrastructure with automatic approval and 100% equity on a case-to-case basis.
On the side of infrastructure, the Airports Authority of India was formed in 1995 by merging International
Airports Authority of India and National airports Authority to accelerate the integrated development
expansion and modernization of the operational, terminal and cargo facilities at the international and
domestic airports and also at civil enclaves.
There were 450 Airports in the country. Of these, 120 airports were managed by airports Authority of
India (AAI), which included 12 international airports.80 civil airports and 28 civil enclaves at the Defence
airports. The existing airports at Hyderabad, Bangalore, Ahmadabad, Goa, Amritsar, Guwahati and
Cochin airport at Nedumbassary had been recently declared as international airports. Government had
also permitted construction of new airports on joint venture basis at Bangalore, Hyderabad and Goa.
Further AAI had identified nine airports for expansion/up gradation. These airports were Bombay, Delhi,
Chennai, Calcutta, Hyderabad, Trivandrum, Ahmadabad, Goa and Bangalore. A number of airports of
international standard were coming up in various places including Amritsar, Calicut, Jaipur and Srinagar.
The AAI had drawn ambitious long term plans to meet challenges posed by ever increasing air traffic and
advancement in aircraft technology. Some of the major plans for implementation were:
• Replacement of ground-based communication, Navigation and Surveillance (CNS) with satellite
based CNS system.
• Establishment of differential Global Positioning system (DGPS).
• Automation in the Air Traffic control Services, and
• Establishment of Automatic Dependent Surveillance (ADS).
Questions:
Examination Paper: Aviation Management
9
IIBM Institute of Business Management
1. What are the major plans for implementation to meet challenges of increasing air traffic and
advancement in technology?
2. Which types of restrictions were present in the development of tourism in the beginning of
liberalization?
3. What is the current status of available total airports in India?
4. Which airports had recently been declared as international airport and also state the name of
airports that had been identified for expansion.
Caselet 2
Indian airports face two big problems. One, poor infrastructure. Two, under- utiliasation of available
equipment and ground infrastructure. It is the second issue that’s become a pet peeve of airline operators.
They point out that this underutilization causes delays and often forces their planes to circle endlessly
while waiting for permission to land. In the bargain, they end up wasting precious fuel.
In Delhi, points out one airline operator, the secondary runway (09/27) is not used for departure. Ditto for
Mumbai. Using them could cut down on the ‘waiting time ‘of planes before takeoff during peak hours.
Then again, the runways are closed for inordinately long periods for maintenance work. In Delhi, the
main runway is closed for two hours daily for maintenance. Says one airline operator: ‘This makes no
sense. Clearly, the quality of maintenance being done is very poor. Very few countries with a single
runway close their runways during the day at all. If at all it closes it is during lean periods.” He argues
that the handing out of contracts by AAI is often done on criteria other than competence. That is why the
work has to be done over and over again.
In its draft report, the Roy committee also commented on the issue. It pointed out that using better quality
paint could dramatically reduce the frequency of painting the runways and the taxiways. It recommended
the use of chemicals for removing rubber deposits (which happens due to friction caused during
touchdown) on runways. Many feel that the flexible pavements of the taxiways and the apron in Mumbai
and Delhi need to be converted to rigid pavements to avoid frequent maintenance work.
Industry sources say that the airspace and airports are also often closed for military activities.whn this
happen, small aircrafts and helicopters are dumped on the main runways, making the system even more
inefficient. Aviation ministry officials say that some of the restricted space for military activities needs to
be made available for civil aviation.
Questions:
1. What are the big problems faced by Indian airports, give suitable examples of these problem?
2. What suggestions were given by the Roy Paul Committee to overcome these problems? How
these can be implemented?
END OF SECTION B
Examination Paper: Aviation Management
10
IIBM Institute of Business Management
Section C: Applied Theory (30 Marks)
• This section consists of Applied Theory Questions.
• Answer all the questions.
• Each question carries 15 marks.
• Detailed information should from the part of your answer (Word limit 200 to 250 words).
1. Define line maintenance; and also explain the maintenance control center responsibilities?
2. Explain goals and objectives of maintenance in aviation”.
S-2-240912
END OF SECTION C

IIBM Exam papers: Investment analysis and behaviour :contact us for answers at assignmentssolution@gmail.com

Examination Paper: Portfolio Management
6
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Investments Analysis and Behaviour
Section A: Objective Type (30 marks)
•This section consists of Multiple choices & short note questions.
•Answer all the questions.
•Part one questions carry 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. Which one of the following is the world’s first electronic stock market?
a. American Stock Exchange
b. Nasdaq National Market
c. Bombay stock Exchange
d. New York stock Exchange
2. The highest price that market maker is willing to pay to buy a security, is referred as:
a. Bid
b. Ask
c. Bid Size
d. Ask Size
3. IPOs stands for ________.
a. Indian Premier Offerings
b. Initial Public Offerings
c. Initial Premier Offerings
d. Initial Private Offerings
4. Under the securities act of ______, when a company makes a public offering, it must file a
registration statement with the SEC.
a. 1934
b. 1936
c. 1935
d. 1933
5. It is the chance of loss in the value of fixed- income investment following a rise in interest rates.
a. Risk
b. Credit Risk
c. Interest Rate Risk
d. Expected Return
Examination Paper: Portfolio Management
7
IIBM Institute of Business Management
6. Extreme changes in financial asset values tied to changing economic fundamentals are defined
as______.
a. Irrational Bubbles
b. Rational Bubbles
c. Market bubbles
d. None of the above
7. Rhythmic pattern of contraction and expansion in the overall economy is referred as ______.
a. Contraction
b. Expansion
c. Business Cycle
d. Recession
8. A measure that assesses what others are doing and suggests you should do the opposite, is:
a. Odd lot Indicators
b. Contrary Indicators
c. Mutual fund flow Indicators
d. Brokerage account credit balance indicators
9. Individuals and Institutions that purchase bonds for interest income and long term capital gains
are:
a. Primary Bond Market
b. Bond Dealers
c. Bond Investors
d. Bond Issuers
10. Funds that charge sales feels ranging from One to three percent, are called:
a. Low-Load Funds
b. No-Load Funds
c. Exchange Fee
d. Back- End Load
Part Two:
1. Write a short note on ‘New York Stock Exchange’.
2. What do you understand by ‘Micro Cap Fraud”?
3. Explain the term ‘Treasury Bonds’.
4. Explain the meaning of ‘Mutual Fund’ and its advantages.
END OF SECTION A
Examination Paper: Portfolio Management
8
IIBM Institute of Business Management
Section B: Caselets (40 Marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselets carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Case let 1
Recently, In India, we had a issue from Hughes Software Solutions (HSS) which was a milestone in our
growth from fixed price offerings to true price discovery IPOs. While the HSS issue has many positive
IPOs. While the HSS issue has many positive and fascinating features, the design adopted was still
riddled with flaws, and we can do much better. How did the Hughes issue worked?
I. The merchant bankers selected ‘syndicate members’ who helped in selling the issue.
II. Disorders were collected by the merchant bankers or syndicate members (only), and submitted using
the computerized IPO system created by NSE. The NSE system only accepted these orders; it did not
reveal any information to investors.
III. Investors could place, modify or delete orders in the book building period- however; they were doing
this in the blind since the system gave them no information.
IV. The NSE system revealed information to the merchant bankers. The full database of orders was
passes on by NSE to the merchant bankers, who could then use this for discretionary allocation of shares.
Questions:
1. What do you think are the flaws in the public issue of Hughes Software? Enumerate them.
2. Can you construct a model for IPO process, which can help in price discovery in setting the
price at the IPO?
Case let 2
Indian corporate is on the verge of testing the US equity markets. Infosys, despite the volatility in the
international market and the continuous downslide in the Bank of New York American Depository
Receipts (ADRs) index has decided to continue offering its $ 125 million level 3 ADR. It would be the
first Indian company to have the issue listed on the NASDAQ. Many more companies were expected to
follow the suit.
ADRs were first created in 1972, when the UK passed a law that restricted British companies from
registering their shares overseas without a British- based transfer agent. So to meet the appetite of US
investors, a new instrument called the ADRs were created.
Questions:
1. What are the unique features of ADRs that attract Indian companies to list on NASDAQ or
NYSE?
2. What is unsponsored ADR? Why did it become obsolete?
END OF SECTION B
Examination Paper: Portfolio Management
9
IIBM Institute of Business Management
Section C: Applied Theory (30 Marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should from the part of your answer (Word limit 200 to 250 words).
1. Discuss the concept of Macroeconomics environment. What are the major forces that drive the
economy?
2. Explain the following terms:
a. Capital Market Line
b. Security Market Line
S-2-210311
END OF SECTION C

IIBM Exam papers: Portfolio Management :contact us for answers at assignmentssolution@gmail.com

Examination Paper: Portfolio Management
1
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Portfolio Management
Section A: Objective Type (30 marks)
•This section consists of Multiple Choices questions & short note questions.
•Answer all the questions.
•Part one questions carry 1 mark each & Part Two questions carry 4 marks each.
Part One:
Multiple Choices:
1. _________ is the market for issue of new securities.
a. Secondary Market
b. Consumer Market
c. Primary Market
d. Stock Market
2. Inflation is measured in terms of either wholesale price or_______.
a. Face Value
b. Retail Prices
c. MRP Value
d. Tax Value
3. _______ is basically a channel through which the savings of investors are made available to
corporations for investment.
a. Consumer Market
b. Stock Market
c. Retail Market
d. Whole sale Market
4. The share premium reserve is the amount paid by the ______ in excess of the par value of the
shares.
a. Shareholders
b. Stakeholders
c. Tax payers
d. Employees
5. _______ measures the return on sales and assets of the firm.
a. Liquidity Ratios
b. Turnover Ratios
Examination Paper: Portfolio Management
2
IIBM Institute of Business Management
c. Common Stock Ratios
d. Profitability Ratios
6. In which of the following chart, the closing price for each period is plotted as a point?
a. Line Chart
b. Bar Chart
c. Point and Figure Chart
d. R- Chart
7. Capital gains or losses arise when the investors sells his securities at a price____.
a. Similar from the Cost
b. Different from the Cost
c. Different from the Profit
d. Similar from the Loss.
8. A steep rise in price, followed by wide uniform fluctuations around an average price lead to
formulation of a ______.
a. Channel
b. Triangle
c. Flag
d. Wedge
9. CML stands for______.
a. Capital Market Life
b. Cost Market Line
c. Capital Market Line
d. Capital Measurement Line.
10. The security return on any day is defined as:-
a. Today’s Return = Today’s Price + Yesterday’s Price
Yesterday’s Price
b. Today’s Return = Today’s Cost―yesterday’s Cost
Yesterday’s Price
c. Today’s Return = Today’s Price + Today’s Cost
Yesterday’s Price
d. Today’s Return = Today’s Price ― yesterday’s Price
Yesterday’s Price
Examination Paper: Portfolio Management
3
IIBM Institute of Business Management
Part Two:
1. Discuss the characteristics of Stock Exchange in India.
2. Describe the Dow Theory.
3. Write a short note on Capital Market Line.
4. Mr. X has put Rs. 9000 in a five – year fixed deposit account with a bank. If the bank pays
interest at the rate of 15% per annum how much money would Mr. X receive on maturity of the
deposit?
5. Mr. Robert bought 90 shares of ICA Fertilizers Ltd. at Rs. 59 each on 1/1/2008. On 1/6/2008, the
company issued bonus shares in the ratio of 1:2. On 1/1/2010 Robert sold 35 of the bonus shares
for Rs. 78. What is the capital gain made by him ignoring indexation?
Section B: Case lets (40 Marks)
•This section consists of Case lets.
•Answer all the questions.
•Each case lets carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Case let 1
The stock market has a method in its madness. Behind the turbulence evident in the market behavior of
the last two years was the revival of the concept ‘big is beautiful’. Being ‘lean and mean’ may be the
management pundits prescription for success in the product market, but the capital market prefers ‘big’
companies and ‘big’ here refers to market capitalization. Large-cap companies are the safest bets for
appreciation in equity values.
Hindustan Lever’s market capitalization grew from a mere Rs. 9,071 crore in 1996 to Rs. 44,838 crore in
1999- a compounded annual growth rate of a little over 70 percent. This growth was achieved largely by
the market pegging the company’s share at a higher value from time to time rather than any infusion of
fresh capital by its shareholders. The collective market cap of top 50 Indian companies went up around
six times- from Rs. 27,475 crore in January, 1996 to Rs. 1,64,973 crore now, that is a compounded annual
growth of nearly 80 percent. In contrast, the market capitalization of all listed stocks on the Bombay
Stock Exchange grew only 15 percent.
Investments in the shares of these companies are coveted for the wealth gains they fetch for the investors.
Profit earned on a unit of share capital would, then offer the best prospects. But the problem with
choosing investment candidates based on current profitability is the risk of these companies not being
able to sustain the level of profits. In an intensely competitive world, with many players jostling for
consumer attention, a small company is particularly vulnerable a predatory attack on its market by a
larger player, however, profitable it may be at the present juncture. In fact, the more profitable it may be
END OF SECTION A
Examination Paper: Portfolio Management
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IIBM Institute of Business Management
at the present juncture. In fact the more profitable it is, the greater the risk of such an attack. As the attack
on its market intensifies, the company responds by price cuts, product promotion and other tactics, all of
which cost money without any guarantee of success.
Soon the company begins to slip on profitability and investor fancy. Rather than wait for a price decline
to exit from the scrip, a long-term investor would be better off investing in companies that are large and ,
by extension, less vulnerable.
Size is a function of the asset base of a company. Assets are financed by a combination of debt and
equity. In the short run, the relationship between debt and equity may be expected to be stable. Hence size
can be measured by reference to the growth in equity capital. As the equity base expands, so must the
company’s market capitalization, price remaining constant. Therefore, it is appropriate that market
capitalization is used to measure corporate size.
Large market cap companies have a greater ability to acquire other companies, take advantage of growth
opportunities, and protect themselves from takeover bids. On the other hand, low market cap companies
must accept lower valuations and be prepared for hostile takeover bids from larger cap companies, unless
they achieve critical mass through mergers and acquisitions.
Questions:
1. Analyze the characteristics of companies which have a small asset base and a low ratio of Market
to book Value?
2. Market capitalization of a company is a product of number of outstanding shares and the current
market price. Since the current market price (CMP) of the stock does not remain constant, is
investing for a long-term in a company looking at its present market value a good guiding
principle? Explain.
Case let 2
Whenever there is a plea for tax concessions for dedicated gilt funds, the government raises the bogey of
principles of high public finance. It is argued that concessions do not make for an optimal tax system and,
therefore, should not be provided to dedicated gilts.
Now what does one make out of this schizophrenic response of the government? The only explanation is
that, the government, to prove its sense of fair play, hates gilts which is its own instrument, and to doubly
prove the point, resorts to sell- flagellation. This sounds harsh but the action of government belies all
logic.
Questions:
1. Why is the government reluctant to provide concession or remove tax on dividends declared by
dedicated gilt funds?
2. How can dedicated gilt funds be used to develop a retail segment for government securities?
3. If dedicated gilt funds are exempted from income tax for individuals, what will be the
implications of such measures on the retail gilt market?
END OF SECTION B
Examination Paper: Portfolio Management
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IIBM Institute of Business Management
Section C: Applied Theory (30 Marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 10 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 Words)
1. Discuss the concept of Portfolio Insurance.
2. Discuss the fundamental notions of modern portfolio theory.
3. Consider a Rs. 50 crores mutual funds floated on 1-1-2003 with a life of 8 year. The fund
estimates that its annual outflow on account of dividend, operating and management costs would
amount to Rs.15.5 crores. Suppose that the rate of interest is 16%. What is the target duration for
this mutual fund?
END OF SECTION C