Allama Iqbal Open University, Islamabad (Department of Business Administration)
Allama Iqbal Open University, Islamabad (Department of Business Administration)
Allama Iqbal Open University, Islamabad (Department of Business Administration)
CHECKLIST
1. Textbook (one)
2. Course Outline
3. Assignment No. 1, 2
4. Assignment Forms (2 sets)
In this packet, if you find anything missing out of the above mentioned material,
please contact at the address given below:
ASSIGNMENT No. 1
Total Marks: 100 Pass Marks: 50
Note: Attempt all question. Examples with special reference to the financial
sector of Pakistan will carry more credit.
Q. 1 Bernstein Tractor Company has just invested in new equipment costing $16,000. The
equipment falls in the five-year property class for cost recovery (depreciation)
purposes. What depreciation charges can it claim on the asset for each of the next six
years? (20)
Q. 2 A company has total annual sales (all credit) of $400,000 and a gross profit margin
of 20 percent. Its current assets are $80,000; current liabilities, $60,000;
inventories, $30,000; and cash, $10,000. (20)
How much average inventory should be carried if management wants the
inventory turnover to be 4?
How rapidly (in how many days) must accounts receivable be collected if
management wants to have an average of $50,000 invested in receivables?
(Assume a 360-day year)
Q. 3 You need to have $50,000 at the end of 10 years. To accumulate this sum, you have
decided to save certain amount at the end of each of the next 10 years and deposit it
in the bank. The bank pays 8 percent interest compounded annually for long-term
deposits. How much will you have to save each year (to the nearest dollar)? (20)
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Q. 4 Write a note on Arbitrage Pricing Theory? (20)
Q. 5 Assuming that the return on real assets of a company exceeds the return on
marketable securities, why should a company hold any marketable securities? (20)
GUIDELINES FOR ASSIGNMENT No. 1:
You should look upon the assignments as a test of knowledge, management skills, and
communication skills. When you write an assignment answer, you are indicating your
knowledge to the teacher in the following way:
Your level of understanding of the subject;
How clearly you think;
How well you can reflect on your knowledge & experience;
How well you can use your knowledge in solving problems, explaining situations,
and describing organizations and management;
How professional you are, and how much care and attention you give to what you do.
To answer a question effectively, address the question directly, bring important related
issues into the discussion, refer to sources, and indicate how principles from the course
materials apply. You must also be able to identify important problems and implications
arising from the answer. The references should be given at the end of the assignment. For
citing references, writing bibliographies, and formatting the assignment, APA format
should be followed.
ASSIGNMENT No. 2
Total Marks: 100 Pass Marks: 50
As there are given topics, you will select the topic according to the last digit of your roll
number mentioned as under:
Topics:
0. Corporate Governance
1. Corporate Social Responsibility
2. Capital Budgeting Techniques
3. Portfolio Risk & Return
4. Merger & Acquisition
5. Bond Valuation
6. Stock Valuation
7. Dividend & Types of Dividend
8. Tools for Short Term & Long Term Financing
9. Financial Markets & Types
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GUIDELINES FOR THE PREPARATION OF ASSIGNMENT # 2
Other Guidelines:
1.5 line spacing
Use headers and subheads throughout all sections
Organization of ideas
Writing skills (spelling, grammar, punctuation)
Professionalism (readability and general appearance)
Do more than repeat the text
Express a point of view and defend it.
You should use transparencies and any other material for effective presentation. The
transparencies are not the presentation, but only a tool; the presentation is the
combination of the transparencies and your speech. Workshop presentation
transparencies should only be in typed format.
You are required to prepare two copies of 2nd assignment. Submit one copy to your tutor/
teacher for evaluation and the second copy for presentations in the workshop in the
presence of the resource person and classmates, which will be held at the end of the
semester prior to the final examination.
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FINANCIAL MANAGEMENT (8513/8422)
Unit 1: Introduction to Financial Management
1.1 The Role of Financial Management
1.1.1 Defining financial management
1.1.2 Goals of firm
1.1.3 Functions of financial management
1.1.4 Corporate Social Responsibility (CSR)
1.2 The Business, Tax and Financial Environments
1.2.1 Business environment
1.2.2 Tax environment
1.2.3 Financial environment
Unit 3: Valuation
3.1 Time Value of Money
3.1.1 Simple and compound interest
3.1.2 Annuities
3.1.3 Compounding more than once a year
3.1.4 Amortizing a loan
3.2 Valuation of Long-Term Securities
3.2.1 Distinctions among valuation concepts
3.2.2 Bond valuation
3.2.3 Preferred stock valuation
3.2.4 Common stock valuation
3.2.5 Rates of return (or Yields)
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Unit 5: Working Capital Management-I
5.1 Overview of Working Capital Management
5.1.1 Working capital
5.1.2 Financing current assets: Short-term and long-term mix
5.1.3 Combining liability structure
5.2 Cash and Marketable Securities Management
5.2.1 Motives for holding cash
5.2.2 Speeding up can receipts
5.2.3 Slowing down cash payment
5.2.4 Electronic commerce
5.2.5 Investment in marketable securities
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Unit 9: Long-term Financing
9.1 Long-term Debt, Preferred Stock and Common Stock
9.1.1 Types of long-term debt instruments
9.1.2 Bonds and their features
9.1.3 Preferred stock and its features
9.1.4 Common stock and its features
9.1.5 Dual-class common stock
9.2 The Loans and Leases
9.2.1 Term loans
9.2.2 Equipment and lease financing
9.2.3 Lease financing vs. debt financing
Recommended Books:
Horne, J. C. V. & Wachowicz, J. R. (2005). Fundamentals of Financial Management
(12th ed.) U.S.A.: Pearson Education Ltd.
Khan, M. Y. & Jains, P. K. (2007). Financial Management (2nd ed.) New Delhi, India:
Tata McGraw-Hill/Irwin.
Brigham, E. F. & Ehrhardt, M. C. (2001). Financial Management (10th ed.) Ohio, U.S.A.:
South Western Pub.
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