Subject Code 1 5 2
BAF Shaheen College Dhaka
Practice Preparatory Test Examination-1 : 2020 Class X
(English Version)
Subject : Finance & Banking (Creative)
Time : 2 Hours 30 Minutes Full Marks70
[N.B.: The figures in the right margin indicate full marks. Read the stems carefully and answer the associated questions. Answer any seven (7) questions in total taking at least three questions from Finance Part and three from Banking Part.]
Finance Part
1. ABC company has 250 million general share capitals. 150 million priority sharecapital and 100 million loan capital. The company has given dividend 12 taka per share in the year just ended. From the previous records, it is found that the company’s divider increases by 5% everyyear. On the other hand, the rate of dividend in priority shares is 7% and the rate of interest of loan capital is 8%. The market price of general shares and priority shares are 260 taka and 110 taka respectively. Taxrate is 30%.
a. What is desirable loan policy? 1
b. How is priority share different from loan capital? 2 c. Calculate the average cost of capital of ABC Company. 3
d. What will happen if a company retains its income without distributingamongthe shareholders? Explain.
4
2. In Aminbazar of Dhaka, there are two juice producing factory. Factory-A produces only apple juice.
Factory-B produces different kinds of juicesuch as apple juice, orange juice, and mango juice. So, both the sale and profit of factory-B is higher than factory-A.
a. What is the full form of PPP? 1
b. What do you mean by liquidity? 2
c. Describe the principles of business finance. 3
d. Between the two factory A and B, which one is less risky? Analyze. 4
3. Md. Abdur Rahim has recently retired from his job. Now, he is thinking ofbuying some shares with his savings. He decided to buy the shares ofKohinur Chemicals. By buying that shares he will get legal rights ontheprofits and assets of the company. He will also get voting rights incaseof taking any decision. But he has to bear comparatively high risk.
a. How many share markets are there in Bangladesh? 1
b. Which is used to indicate the overall condition of share market? 2
c. Which type of share is Md. Abdur Rahim considering to purchase?Explain. 3
d. Describe the process of issuing share which one is Mr. Abdur Rahmanabout to buy. 4
4. Mr. Sakib is the financial manager of Apex Ltd. He is thinking ofinvesting 50,000 taka in a project. He has two options- Project Diba andProject Nishi. The details of these two projects are given below :
Project - Diba Project - Nishi Initial
investment
Tk. 50,000 Tk. 50,000
Maturity 5 years 5 years
Net profit before
depreciation and tax
Tk. 10,000, Tk. 13,000, Tk. 15,000, Tk. 18,000 and Tk. 22,000.
Tk. 15,000, Tk.
17,000, Tk. 20,000, Tk. 8,000 and Tk.
28,000.
Tax rate 30% 30%
a. What is capital budgeting? 1
b. What are the limitations of ARR method of capital budgeting? Explain. 2 c. Calculate the ARR of project Diba. 3
d. For the purpose of long term investment which project should be accepted by Mr. Sakib. 4 5. In the following table, the rate of return of project ‘Shapla’ is given:
2015 2016 2017 2018 2019
-9% 25% 18% 30% 25%
a. What is uncertainty? 1
b. What types of risk is beared by debenture holders? Explain.2 c. Calculate the risk of the project ‘Shapla’. 3
d. ‘Higher value of standard deviation indicates higher risk’ evaluate thestatement. 4
6. Miss Shampa wants to deposit some money in the hope of getting 2,00,000 after 8 years. “Agrani Bank”
offered him yearly compound interest at the rate of 11% while “Prime Bank” offered him monthly compounding interest at the rate of 8%.
a. What is “Rule-72”? 1
b. “100 Taka today is more valuable than 100 Taka after one year”-Explain. 2
c. How much money should Miss Shampa deposit to get Tk. 2,00,000after 8 years? 3 d. Which bank do you think more profitable for Miss. Shampa? Give yourdecision. 4
Banking Part
7. Zarif is a student of BBA. To buy a laptop his father gave him a signedcheque of Tk. 80,000 which can be encased by anyone. While Zarif was going to withdraw money from the bank, he lost the cheque and someone got the cheque and collected the amount from bank. After this incident his father has decided to use crossed cheque in histransactions.
a. What is the main motto of banking business? 1 b. What is debit card and credit card? 2
c. Why did the person who got the cheque get the change to withdrawmoney from the bank? 3 d. Analyze the logic of using crossed cheque by Zarif’s father. 4
8. Md. Siam is a businessman in Chattogram. At first, he did all his business transactions by cash. But now as his business is growing, he is facing problems in cash transactions. So, he is feeling for opening a bank account. He went into the nearby bank and opened a bank account. And he is now doing his business transaction very easily through bank.
a. Which system is called the mother of banking system? 1
b. What is RFCD? Explain. 2
c. What type of bank account is opened by Md. Siam? Explain. 3 d. Give your logic for Md. Siam to open a bank account. 4
9. The name of bank ‘X’ is written on all notes and we do our transactions with bank ‘Y’. Bank ‘X’ is the guardian of bank ‘Y’ which controlls all the activities of bank ‘Y’. Bank ‘X’ is called king and sun of banking society.Bank ‘X’ is also considered as the lender of last resort.
a. Who is the leader of banking society? 1 b. What do you mean by lender of the last resort? 2 c. Which type of bank is bank ‘X’? Explain. 3
d. Describe the role of bank ‘X’ in the economic development of anycountry. 4
10. Size, structure, objectives and formation of banking system have changed a lot with the progress of time.
Banking has passed through different phases of change. In this competitive market, banks are providing various innovative banking products and services.
a. What is banking? 1
b. Explain the principle of security of banking business. 2 c. Describe the structural classification of bank. 3
d. Write down the products and services provided by Islamic Banks. 4
11. Mr. Fahim is a businessman. His business is related to export-import.He has an account with a bank which has no branch in abroad and also has no online banking facility. So, it is difficult for Mr. Fahim to do business in abroad. That’s why he closed his account with the bank andtransferred all his account balances into another bank.
a. What is international bank? 1 b. Explain the functions of currency. 2
c. Why is Mr. Fahim transferring his account into another bank? 3 d. What should be the client responsibilities towards the bank? 4
