Corporate Finance Management 2
MOCK Exam – Essay questions topics
Student Name: _______________________________________
This exam consist of 2 parts
Essay type questions and calculation type questions.
All questions are compulsory.
You have 90 minutes to complete your work.
Essay type questions:
Write an essay on each of the following topics:
1.
Explain the merit of capital budgeting. What problems is capital budgeting trying
to solve and show examples of projects that are assessed by capital budgeting
10 points
2.
Explain concepts of diversifiable and non-diversifiable risk in portfolio theory.
10 points
3.
Using an easy practical example explain the key assumption of Arbitrage Pricing
Theory.
10 points
4.
Explain at least two methods of takeover defence.
10 points
ADDITIONAL TOPICS
1. Discuss the concept “The Time Value of Money”; discuss how and when it is used in
corporate finance.
2. Describe the concept of cost of capital and explain how it is measured. How is this
cost influenced by financial leverage of the firm?
3. Explain the concept of diversification, and its role in minimizing risk. How is risk
measured, and what types of risk are there?
4. What is the Capital Asset Pricing Model (CAPM)? How is the variable beta used, and
what are the strengths and weaknesses of the model.
5. The financial statements of a firm include both profit (income) and a cash flow. What
are the differences between the two, and what is each used for?