Fina 432: Financial Corporate Policy Question Paper
Fina 432: Financial Corporate Policy
Course:Accounting,Finance And Investiments
Institution: Kenya Methodist University question papers
Exam Year:2013
KENYA METHODIST UNIVERSITY
END OF 3''RD ''TRIMESTER 2013 (PT) EXAMINATION
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING FINANCE & INVESTMENT
UNIT CODE : FINA 432
UNIT TITLE : FINANCIAL CORPORATE POLICY
TIME: 2 HOURS
Instructions:
Question one and any other two.
Question One
The Capital Market Authority (CMA) in year 2000 defined corporate governance as the process and structures used to direct and manage business affairs of the company towards enhancing prosperity and corporate accounting. State and discuss seven (7) principles of corporate governance.
(15 marks)
The functions of Finance Manager include routine functions as well as managerial functions. The CFO is one of the top decision makers. Discuss five functions of the Chief Financial Officer.
(10 marks)
Any business firm would have certain objectives which it aims at achieving. Explain three major goals of a firm.
(5 marks)
Question Two
There are two main theories of capital structure. The net income approach and the net operating income approach. Differentiate these two theories.
(10 marks)
The original normative theory of a company. Valuation and capital structure was put formed in form of behavioral justification by Modigiliani and Miller (1958). State and explain five assumption of the MM theory.
(10 marks)
Question Three
Dividend theory helps decide which is better out of payment of divided new or the retention and earnings for capital gain. Explain five factors that determine the dividend decision.
(10 marks)
There are two sources and finance namely debt finance and equity finance. Discuss three advantages of each type of finance (debt and equity).
(10 marks)
Question Four
Performance measurement is one of the most important management responsibilities. Differentiate between, Total CEO Compensation and stretch targets as forms of incentive designs.
(10 marks)
There are several forms of restructuring. Discuss and differentiate two forms of restructuring.
(10 marks)
Question Five
Explain the main components of a code of corporate governance.
(10 marks)
Explain how shareholder maximization goal can be more superior than profit maximization.
(10 marks)
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