Pmbf 7401:Theory Of Finance Question Paper
Pmbf 7401:Theory Of Finance
Course:Doctor Of Philosophy In Business Management
Institution: Kenya Methodist University question papers
Exam Year:2013
Theory of finance (PMBF 7401) 1ST RIMESTER 2013
KENYA METHODIST UNIVERSITY
SCHOOL OF BUSINESS AND ECONOMICS
END OF TRIMESTER EXAMINATION FOR DOCTOR OF PHILOSOPHY IN BUSINESS ADMINISTRATION AND MANAGEMENT JANUARY, 2013
UNIT CODE : PMBF 7401
UNIT TITLE : THEORY OF FINANCE
TIME: 3 HOURS
INSTRUCTIONS:
Answer all questions
Question One
Describe Finance Theory
(10 marks)
Modern theory of finance is no longer very modern dating back to the late 1950s. Discuss in details the major theoretical building blocks of financial economics in relation to development of theory of corporate finance.
(15 marks)
Question Two
Financial economics assess asset market performance according to standards or ’efficiency.’ Discuss the main types of efficiency in relation to asset market efficiency.
(15 marks)
Discuss implications of the efficient markets hypothesis for corporate finance.
(10 marks)
Question Three
Discuss the major propositions of arbitrage principle that provide different sets necessary and sufficient conditions for the absence of arbitrage opportunities.
(20 marks)
Give your critic on the propositions discussed in (a) above.
(5 marks)
Question Four
Discuss relevant sets of conditions of assumptions from which the predictions of the CAPM are derived.
(20 marks)
Comment on assumptions of CAPM.
(5 marks)
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