Introduction to Finance — DU B.A. (Hons.) Business Economics (BBE) Previous Year Question Papers

(b) The paper contains 6 questions. 1. (a) Explain the key characteristics of a financial system. 9 (b) Analyse the role of financial institutions in promoting savings and investment. 9 2. (a) "Wealth maximisation is a better criterion than profit maximisation." Do you agree? Give reasons. 9 (b) A sum of ` 55,650 is deposited today in a bank account at 15% rate of interest per year. What will be the amount after 10 years if interest is compounded annually? Why is the consideration of the time value of money important in investment? 9 3. (a) "There are different sources that contribute to the variation in return from an investment". Elucidate. 10 (b) The risk and return of two projects are shown below: 8 Expected Return 12% 20% An investor plans to invest 60% of his available funds in Project X and 40% in Y. The correlation coefficient between the portfolio returns is +1.0. Find out the risk and return of the portfolio of X and Y. What will be the risk of the portfolio if the correlation is -1? 4. (a) Critically trace the evolution of the International Monetary System, delineating its major institutional phases. (b) Examine the mechanisms underlying exchange rate determination in foreign exchange markets. 9 5. (a) Explain the Economy-Industry-Company (EIC) approach as used in the fundamental analysis. 12 (b) What are the functions of a finance manager? 6 6. Write short notes on any three of the following: (b) Efficient Market Hypothesis (c) Primary Vs Secondary Markets (d) Exchange Traded Funds (e) Retained Earnings (f) Exchange Rate Quotations