group 'b' - · pdf filebank guarantee of rs.200,000 issued by nabil bank ltd. to mr....

MGT 250: Entrepreneurship & Small Business ManagementBBS 4th Year

Model QuestionFull Marks: 100Pass Marks: 35

Candidates are required to give their answer in their own words as far as practicable. Thefigures in the margin indicate full marks.

Group 'A'Attempt All QuestionsBrief Questions Answer [10 x 2 = 20]1. Who is an entrepreneur?2. What is small business?3. Mention any four sources of idea generation in small business.4. What is organizational feasibility analysis?5. Mention major two quantitative tools to aid decision making.6. Define venture capital.7. Mention any two sources of debt financing.8. What is motivation research?9. What is capital budgeting?10. Mention any two sources of long- term funds.

Group 'B'

Descriptive Answer Questions (attempt any five) [5 x 10 = 50]11. State and explain the characteristics of successful entrepreneurs.12. Explain the importance of small business in Nepalese economy.13. What is franchising? Explain the advantages of franchising.14. Define feasibility analysis. Explain the factors affecting location sustainability15. What is new venture? Explain the 4ps of marketing for new ventures.16. What are the problems in the operations of small stores in Nepal?

Group 'C'

Analytical Answer Questions (attempt any two) [2 x 15 = 30]17. Define entrepreneurship .Explain the positive and negative aspects of entrepreneurship.18. What is small business promotion centre? Discuss the role of ministry of commerce & industry in

promoting and strengthing small business in Nepal.19. What are factors for pricing decision? Explain the marketing research techniques & activities used

in small business.

MGT254: Quality Management

BBS 4th YearModel Question

Full Marks: 100Pass Marks: 35


Group 'A'

Attempt All QuestionsBrief Questions Answer [10 x 2 = 20]

1. Define the term service quality.2. What is supply chain Management?3. Define materials requirement planning.4. What is pereto chart in quality planning?5. Define zero defect concepts in quality.6. Mention any two roles of Nepal Standard of Quality control (NSRC).7. Mention any two benefits of quality improvement.8. Define quality infrastructure.9. Mention any four benefits of TQM.10. What is internal branch marketing in quality planning?

Group 'B'

Descriptive Answer Questions (attempt any five) [5 x 10 = 50]11. What is strategic quality management? Explain the importance of quality in business.12. Define quality planning .Explain the different quality planning tools.13. What is business process reengineering (BPR)? Explain the advantage of BPR.14. Explain the issues in measuring service quality using SERVQUAL.15. What are the techniques of quality rating in the service industry? Explain16. What is cost of quality? Distinguish between prevention cost and appraisal costs.

Group 'C'

Analytical Answer Questions (attempt any two) [2 x 15 = 30]17. Discuss the challenges of quality management of service sector in Nepal.18. What is Quality Function Deployment (QFD)? Explain the applications of QFD in

Organization.19. Define Total Quality Management (TQM). Discuss the quality control mechanism in

Nepalese industries.

MGT253: Productivity ManagementBBS 4th Year



Group 'A'


1. Define the term labor productivity.2. Mention any two types of productivity measurement.3. What is management by objective (MBO)?4. Mention any two productivity improvement strategies.5. What is system approach in productivity measurement?6. What is hardware oriented in productivity?7. Mention any two function of Asian Productivity Organization (APO)8. What is productivity movement?9. Define total factor productivity?10. Mention any two action plans in productivity improvement

Group 'B'

Descriptive Answer Questions (attempt any five) [5 x 10 = 50]11. Explain the approaches to productivity appraisal.12. What are factors affecting productivity? Explain13. Define productivity measurement .Distinguish between macro level and micro level of

productivity measurement.14. Explain the importance of ILO in productivity movement.15. Distinguish between the human-wave oriented and software oriented productivity techniques.16. What are the problems of productivity in Nepalese organization?

Group 'C'

Analytical Answer Questions (attempt any two) [2 x 15 = 30]17. What is productivity management system? Discuss the Gold's approach to productivity

analysis in the enterprise.18. What is Value- added measurement of productivity? Explain the productivity improvement

strategies used by organization.19. Discuss the provisions of productivity policy in Nepal.

MGT 252: Management of Industrial RelationsBBS 4th Year



Group 'A'


1. Mention any two types of IR.2. Mention any two objectives of trade union.3. Define the term quality circle.4. What is wage determination?5. Mention any two types of labor welfare problems.6. What is technology change in work place?7. What is Productivity?8. Define the term quality of work life9. What is participatory management?10. Define arbitration.

Group 'B'

Descriptive Answer Questions (attempt any five) [5 x 10 = 50]11. Explain the objectives of Industrial Relations (IR).12. What is Industrial dispute? Explain13. What are the determinants of worker participation in management ?Explain14. Define labor legislation? Explain the objectives of labor legislation.15. What is ILO? Explain the objectives of ILO.16. State and explain the effects of new technology in employment.

Group 'C'

Analytical Answer Questions (attempt any two) [2 x 15 = 30]17. Define trade union .Discuss the provisions in Trade Union act 2049 in Nepal.18. What is collective bargaining? Explain the collective bargaining issues in Nepalese

organization19. Discuss the emerging trends and issues of industrial relations in Nepalese Organizations.

MGT 251: International BusinessBBS 4th Year



Group 'A'


1. Define economic integration2. What are the forms of globalization?3. What is domestic business?4. Define licensing.5. What is political risk in international business?6. What is deregulation?7. What is gap analysis?8. Define the term collaborative venture.9. What is global outsourcing?10. Mention any two modes of payment in international business.

Group 'B'

Descriptive Answer Questions (attempt any five) [5 x 10 = 50]11. State and explain the challenges of international business (IB).12. What is regional economic integration? Explain the benefits of integration.13. What are the drivers of market globalization? explain14. Define strategic alliance .Explain the benefit of strategic alliance.15. What are the techniques of financing in foreign trade? Explain16. Explain the criticisms of multinational companies (MNCS).

Group 'C'

Analytical Answer Questions (attempt any two) [2 x 15 = 30]17. Define globalization .Discuss the reasons for international business expansion.18. Distinguish between merger and acquisition. Explain the strategies for foreign direct

investment (FDI).19. What is competitive strategy in international business (IB)? Explain the role of strategy in IB.

Accounting for BankingBBS 4th Year

Model QuestionFull Marks: 100

Pass Marks: 35

Candidates are required to give their answer in their own words as far as practicable. The figuresin the margin indicate full marks.

Attempt ALL Questions

Brief Answer Questions (10x2=20)

1. Differentiate between NOSTRO and VOSTRO account.2. Explain the meaning of endorsement.3. What is call deposit account?4. Define the concept of know your customer (KYC).5. Write any two importance of branch less banking (BLB).

6. Nepal Bank Ltd. issued L/C amounting to Rs.5,000,000 to Tea Traders Pvt. Ltd. atmargin of 10% and L/C commission of 2%.Required: Journal entries in the books of ABC Bank Ltd

7. Rastriya Banijya Bank Ltd. approved personal overdraft of Rs.1,000,000 to Mr. RamPrasad for his personal use and amount was disbursed to his account. Processing fee ofRs.2,000 was charged.Required: Journal entries to record the loan disbursement

8. Bank guarantee of Rs.200,000 issued by Nabil Bank Ltd. to Mr. Hari was expired on 30th

November, 2014, so, Mr. Hari has deposited Rs.20,000 as margin money.Required: Journal entries in the books of Nabil Bank

9. Jumla branch of Everest Bank Ltd. issued a draft on request of its customer forRs.500,000 payable at main branch, Kathmandu. Bank charged Rs.50 as commission andRs.10 as communication.Required: Accounting entries in Jumla Branch

10. A bank’s average loan to customers was Rs.1,000,000 in a year while it earned interestincome of Rs.120,000 and paid interest of Rs.60,000.Required: Net interest margin

Short Answer Questions (attempt any five) (5x10=50)

11. The following information of Sunrise Bank Ltd. as on 31st Ashad, 2072 were as follows:(Rs. in millions)

Particulars 2069 2070 2071 2072

Interest Income

Interest Expenses

Commission & Discount Income

Other Operating Income

Exchange Fluctuation Income

Movement in Interest Suspense A/c

Non Operating & Extraordinary Income

2,000

1,000

25

20

10

20

5

2,500

1,250

50

30

(5)

15

7

3,000

1,500

75

40

20

10

9

3,500

1,750

100

50

30

5

11

Required: the operational risk exposure of Sunrise Bank Ltd using basic indicator approach,where Alfa is 15% (fixed percentage of gross income) and current capital adequacy requirementis 10% (10)

12. a) The following information is extracted from the records of Mega Bank Ltd. as on 31st

Ashad, 2072. (Rs. in ‘000)Particulars Amount

Paid up Equity Share Capital

Statutory general reserve

Retained earning

Loan loss provision

Exchange equalization reserve

Unaudited current year cumulative profit

Goodwill

2,000,000

40,000

10,000

65,000

15,000

72,500

250

Required: The Core Capital or Tier 1 Capital as per Capital Adequacy Framework (5)

b) Following balances are extracted from the books of Himalayan Bank Ltd. as on 31st

Ashad, 2072Particulars Amount (Rs.)

Cash balance

Balance with NRB for CRR

Balance with other banks

Government securities

Interbank lending

Domestic deposit at preceding month

Current and Call deposit

Saving deposit

Fixed deposit

1,000

2,000

500

200

100

3,000

10,000

8,000

Required: Statutory Liquidity Ratio (SLR) and excess or short fall of amount maintainedby the bank for the month of Ashad, 2072 (5)

13. The following information are extracted from the financial statement of a commercialbank:Particulars Amount (Rs.)

Net profit before tax

Fixed assets

Total assets (including Rs.1,000,000 last year)

Non-performing loan

Total operating expenses

Current liabilities as percentage of fixed assets

Equity as percentage of total assets

Non-performing loan to total loan

Interest on loan

Tax rate

500,000

2,500,000

4,000,000

100,000

400,000

20 %

30 %

5 %

10 %

20 %

Required: Net profit after tax, Current ratio, Return on total assets, Return on equity,Amount of total loan, Total borrowing to shareholder equity, Assets growth rate, Interestto total operating expenses, (8x1.25=10)

14. a. The following information of the bill of exchange transaction of NIC Asia Bank Ltd.are provided:Particulars Amount

Amount of bills purchased

Exchange rate at the date of purchase

Amount of bills purchased Rs.

Bank discount/commission

Communication charges

Security deposit

Net payment to the customer

Amount credited from the agency bank on collection

Exchange rate at the date of settlement

Agency charges

Amount credited in agency bank

$ 1,000

$ 1 = Rs.105

Rs.105,000

Rs.500

Rs.500

Rs.1,000

Rs.103,000

$ 995

$ 1 = Rs.106

$ 5 x Rs.106 = 530

Rs.105,470

Required: Record the foreign bill transactions in the books of NIC Asia Bank Ltd (5)

b. Explain in brief about the opportunities and challenges of banking sectors in Nepal.(5)

15 a. The following information of an independent branch of a bank is provided to youi. Income of Rs.5000 allocated to the branch by head office but recorded in

the branch bookii. Provision for doubtful loans whose accounts are kept at head office not

provided earlier for Rs.1000iii. A remittance of Rs.150000 sent by branch has not been received by head

office on the date of reconciliation of accountsiv. Branch incurred travelling expenses of Rs.10000 on behalf of other

branches, but not recorded in the books of branchv. Head office collected Rs.120000 directly from a branch customer. The

intimation of the fact has been received by the branch just nowRequired: Journal entries in the books of branch (5)

b. Why it is necessary for every financial institute of the country to check and controlmoney laundering related activities? (5)

16. Explain, six C’ of credit, which are used for measuring industry and business risk analysis.(10)

Long Answer Questions (attempt any two) (2x15=30)

17. The following is the statement of profit and loss account of ABC Bank limited for the period ended 31Ashad 2072

Particulars Rs. in MillionsInterest Income 2500Interest Expenses (including Rs.100 expenses for long term borrowing) 1500Net Interest Income 1000Commission and Discount 100Other Operating Income 40Exchange Fluctuation Income 50Total Operating Income 1190Staff Expenses 300Depreciation 50Bad Loans written off 25Other Overhead Expenses 200Operating Profit Before Provisions For Possible Loss 615Provisions for possible losses 25Operating Profit 590Income from Sale of Investments 80Profit From Regular Operations 670Tax Provision 160Net Profit /(Loss) 510

Statement of Financial Position of ABC Bank LimitedRs. in Millions

Capital & Liabilities Ashad 2072 Ashad 2071

Share Capital 4,000 4,000Reserve and Funds 2,960 2,450Debenture & Bonds - -Borrowings 2,150 2,000Deposits 79,580 61,180Bills Payables 10 10Loan Loss Provisions 725 700Income Tax Liabilities 100 150

Total Liabilities 89,525 70,490

Assets Ashad 2072 Ashad 2071

Cash Balance 2,500 2,000Balance with Nepal Rastra Bank 10,000 8,000Balance with Banks/Financial Institution 500 450Money at Call and Short Notice 490 480Investment 25,600 24,150Loans, Advances and Bills Purchase 50,000 35,000Fixed Assets 425 400Non-Banking Assets 10 10

Total Assets 89,525 70,490Required: Cash Flow Statement for the year ended Ashad, 2072

18. The following information of Rastriya Banijya Bank Ltd. for the year ended 31st Shrawan2072 is given below:

Particulars Rs.

Share Capital (Shares of Rs.100 each fully paid)

Statutory Reserve Fund on 1st Shrawan, 2071

Bad debts

Establishment expenses

Current Deposits

Interest paid on borrowing

Interest paid on deposit

Saving Accounts

Discount received

Fixed Deposits

Income from commission and exchanges

Income from issue and renewal of Credit and ATM Card

Premises

Cash in hand

Balance with Nepal Rastra Bank

Interest received

Investment in Shares

1,200,000

100,000

12,500

120,000

1,350,000

248,000

500,000

1,720,000

495,000

875,000

140,000

150,000

1,050,000

5,000

22,000

1,280,000

92,500

Cash with other banks and financial institutions in Nepal

Term loan in Nepal

Cash Credit – Hypothecation in Nepal

Cash Credit – Pledge in Nepal

Bills purchased

Salaries, allowances and Provident Fund

Investment in treasury bills

Dividend received

Other liabilities

284,500

1,000,000

1,000,000

950,000

1,600,000

445,000

120,000

8,000

380,625

Additional information:a. Unexpired discount as on 31st Shrawan, 2072 was 75,000b. Provision for bad debts is Rs.8,000c. Provision for taxation is 25%d. Amount transfer to statutory reserve is 20%Required: a. Income Statement and Balance Sheet on 31st Shrawan, 2072 as per thedirectives of Nepal Rastra Bank (15)

19. “BASEL is a comprehensive set of reform measures, to strengthen the regulation,supervision and risk management of the banking sector”, comment. (15)

***

Accounting for BusinessBBS 4th Year


Pass Marks: 35

Candidates are required to give their answer in their own words as far as practicable. The figures in themargin indicate full marks.



1. State any two characteristics of joint-venture.2. What is the purpose of providing del-credere commission?3. Define the term ‘Branch Adjustment Account’..4. Write down the meaning of dead rent.5. Explain the concept of departmental accounts.

6. X and Y are partners sharing profit and losses in the ratio of 3:2. They admit Z into thepartnership for 1/5th share of profit.Required: New profit sharing ratio, if Z acquires 6/40 from X and 2/40 from Y

7. A, B and C are partners sharing profit in the ratio of 3:2:1. The firm had taken individualpolicies for each partner, i.e. A for Rs. 10,000. B for Rs. 7500 and C for Rs. 5000. Thesurrender value of each policy is 50% of the policy amount on 30th Chaitra, 2071. A died on30th Chaitra, 2071, B and C decide to continue the business.Required: The necessary journal entries, if the surrender value of individual policies appearsin the books

8. A company leased a colliery on 1st Baishak, 2069 at a minimum rent of Rs.10,000. Theroyalty fixed is Rs.5 per ton with a power to recoup the short working over the first threeyears of the lease. The output of the colliery for the first three years were:Years 2069 2070 2071Output/Ton 1800 2000 2200Required: Short-working account

9. On 1st Baishak, 2066, Mr. X purchased 2 motorbikes from Syakar Company Ltd. underinstallment system for Rs. 350.000. He paid Rs. 150,000 on delivery of motorbikes. Thebalance was to be paid in the two equal installment of Rs.100,000 plus 12% interest p.a. Mr.X charges depreciation at 20% p.a. in diminishing balance method.

Required: Motorbike account in the books of purchaser

10. The following information is provided:

Units Units

Stock in hand (1-1-70)

Stock with customers (1-1-70)

Stock with customers

(31-12-70)

Purchases

Sent out to customer

Returned to supplier

5,000

25,000

32,000

25,000

50,000

1,000

Returned by customers (other

than those lost in transit)

Scrapped

Lost in transit while returning

from customers site

40,000

3,000

1,000

Required: The number of bottles in hand on 31-12-2070


11. The following is the Trial Balance of Pokhara Branch on 31st Chaitra,2070:

Rs. Rs.

Cash in hand

Opening stock

Debtors

Goods from Head Office

Furniture

Purchases

Wages

Salaries

Trade expenses

1,500

3,000

5,000

20,000

1,000

30,000

1,500

2,000

1,000

Head Office a/c

Sales

Creditors

15,000

45,000

5,000

Total 65,000 Total 65,000

Closing stock was valued at Rs. 15,000.Required: In the books of Head Office:

a. Entries to incorporate the branch trial balanceb. Branch Trading and Profit and Loss Accountc. Branch account (5+3+2=10)

12. A limited company supplies their products in returnable drums. A drum is invoiced at the rate ofRs.100, but if it is returned within 4 weeks, a credit of Rs.80 is given to the customer. A drum costs Rs.70to the company. The following particulars are supplied to you:

Units Units

Opening stocks:

with customers

in stores

Sent to customers

5,000

7,000

30,000

Drum sent but still returnable

Drum returned by customers

Drum condemned during the year

Purchase during the year

5,500

29,000

1,500

1,000

Amount collected by the sale of condemned drums Rs.16,000.Required:

a. Drums stock accountb. Drum Provision accountc. Drums Trading account (3+2+5=10)

13 a. K and P entered into a joint venture to consign 5,000 pieces of cotton shirts to B of Birjung to besold on their risk. They agreed to share profit in the ratio of 3:2 respectively. K dispatched 3,000 pieces ofshirts costing Rs. 500 each and paid for freight and other expenses of Rs.15,000 and P also dispatched2,000 pieces of shirts at Rs. 475 each and paid freight and other charges Rs.10,000.

All shirts were sold by B for Rs. 3,200.000. Out of which B deducted Rs. 30,000 as his expenses. He wasentitled to a commission of 3% on sales. B settled his account by sending bank draft to P.

Required: Joint venture account and B of Birjung account in the books of P (5)

b. The following balances are extracted from the books of a medical practitioner on 31st Chaitra, lastyear:

Rs. Rs.

Medical fees earned

Running and maintenance cost

of vehicle

Pay to assistant (profession)

Staff salaries

Household expenses

150,000

15,000

40,000

12,000

20,000

Received interest on

Investment (household)

Gas and electricity

Provision for depreciation

Household

Profession

10,000

4,000

10,000

5,000

Additional information: Running and maintenance cost of vehicle is to be allocated equally between household and

profession. One-fourth of staff salaries were related to household. One-fourth of gas and electricity was related to profession Income tax to be ignored.

Required: Profit and Loss account for the year ended 31st Chaitra, last year. (5)

14 a. Prabin and Prakash were in equal partnership. Their balance sheet stood as under on 31st Aswin,2068 when the firm was dissolved:

Liabilities Rs. Assets Rs.

Creditors

Prabin’s Capital

40,000

10,000

Sundry Assets

Cash

Prakash’s Capital

30,000

5,000

15,000


The assets realized Rs. 20,000. The expenses of realization amounted to Rs. 2,000. Prabin’s privateestate is not sufficient to pay even his private debt whereas Prakash has a surplus of Rs. 1,000 in hisprivate estate.

Required: Capital accounts of partners (5)

b. Define consignment. What is the difference between consignment and sales of goods? (5)

15 a. On 1st Baishak, 2071, Rajesh bought a television from Bishal Trading Co. Ltd, under hire purchasesystem. The cash price of which being Rs. 20,900 as per the following terms:

i) Rs. 6,000 to be paid on signing the agreement.ii) Balance to be paid in three equal installments of 6,000 at the end of each year.iii) The rate of interest charged by the seller is 10% p. a.

Required: Journal entries in the books of the purchaser (5)

b. What do you mean by royalty? Point out the importance of minimum rent in the royaltyagreement. (5)

16. Explain the meaning of Hire Purchase System? In what respects does it differ from Installmentsystem? (4+6=10)


17. A, B and C were on partnership business sharing profit and losses in the ratio of 5:3:2. Their BalanceSheet on 31st Chaitra, last year was given under:


Capital: A

B

Account Payable

Bills Payable

Profit and Loss

60,000

40,000

30,000

20,000

10,000

Plant & Machinery

Inventory

Account Receivable

Cash at bank

C’s Capital

50,000

40,000

30,000

20,000

20,000

Total 160,000 Total 160,000

On 1st Baisakh of current year, they decided to liquidate the business. ‘A’ agreed to take inventory at bookvalue less 10% and discharge account payable. Plant and machinery realized Rs.40,000 and accountreceivable only Rs.25,000. The realization expenses amounted to Rs.3,000. On the same date C wasadjucated as an insolvent and only Re.0.50 in a rupee was realized from his personal estate.Required:

a. Entries for dissolution of firmb. Realization accountc. Partners’ capital accounts (6+4+5=15)

18. The particulars relating to the consignment transaction are given below:a) 1,000 telephone sets costing Rs.300 per set were consigned by the consignor at an invoice price ofRs.400 per set.b) The consignee was informed to sell at Rs.450 per set.c) Expenses made by the consignor on consignment were:* Freight and insurance Rs.5,000* Miscellaneous expenses Rs.2,000.

d) The consignor drew a there months bill on consignee for Rs.200,000.e) An account sale from the consignee disclosed the following particulars:i. Sales of 400 sets at Rs. 450 per set for cash and 400 sets at Rs.500 per set on credit.ii. Consignee took over the balance at Rs.500 per set.iii. Expenses incurred for consignment were:

- carriage Rs. 5,000- octroi Rs. 4000- selling expenses Rs. 21,000.

iv. Commission of 5% and 2% as del-credere commissions on gross sales proceeds.v. All debtors paid cash except one owing Rs.2,000.vi. The consignee remitted the amount due on consignment.Required:

i) Consignment account and consignee’s a/c in the books of consignorii) Entries and consignor’s account in the books of consignee. (7+8=15)

19. Differentiate between dissolution of partnership and dissolution of firm. State how and under whatcircumstances a firm may be dissolved. (6+9=15)

The End

***

Advanced Financial AccountingBBS 4th Year


Pass Marks: 35




1. Write any two objectives of financial accounting.2. State any two characteristics of accounting principles.3. Mention any two utilities of accounting standard for preparation of financial statement.4. Explain the benefits of human resource accounting.5. Write any two objectives of government accounting in Nepal.

6. The net profit of a company for the last five years after providing operating expenses andtaxation were Rs.42,000, Rs.47,000. Rs.45,000, Rs.39,000 and Rs.47,000. The capitalemployed in the business is Rs.400,000 on which the rate of return of 10% is expected.Required: Value of goodwill under capitalization of average profit method

7. The following particulars of a company is provided:a. Total assets and total liabilities of the company during a period are Rs.563,000 andRs.65,000 respectively.b. Preference share capital for that period is Rs.150,000.c. Equity share capital of Rs.100 each is Rs.300,000Required: Value of equity share using net assets method

8. Mr. Rai had started a business on 1st January, 2014 with a capital of Rs.21,000 and onDecember, 2014 his capital was increased to Rs.64,000. He gave to his son Rs.4,000 andhe withdraws Rs.1,000 every month for personal purpose. He had a bicycle which he hadbeen sold for Rs.10,000 and invested the same into the business.Required: Statement of profit for December, 2014 under single entry system

9. The following information are provided:a. Work certified and work uncertified are Rs.250,000 and Rs.10,000 respectivelyb. Cash received being 80% of work certifiedc. Reserve created from notional profit of the uncompleted contract was Rs.25,000

Required: Work in progress account showing net balance amount transferred to balancesheet

10. The capital of a subsidiary company is Rs.500,000 of Rs.100 each. The HoldingCompany acquired 4,000 shares at a cost of rs.150 each. The general reserve andundistributed profit on the date of acquired were Rs.25,000 and Rs.75,000 respectively.The profit earned after the date of acquired was Rs.30,000.Required: Minority Interest of minority shareholders


11. AB construction company started the contract work on 31st Ashad, 2070. They close theirbooks of account for the year on 31st Chaitra each year. The following information isavailable from their costing records on 31st Chaitra, 2070.

Material sent to site Rs.43,000Foreman salary Rs.12,000Wages paid Rs.100,000

A machine costing Rs.30,000 remained in use on site for 1/5th of the year. Its working life wasestimated at 5 years and scrap value at Rs.2,000. A supervisor is paid Rs.2,000 per month and hehad devoted one-half of his time on the contract. All other expenses were Rs.14,000. Thematerial on site were Rs.2,500. The contract price was Rs.400,000.On 31st Chaitra, 2070, 2/3rd ofthe contract was completed, however the architect gave a certificate only for Rs.200,000, onwhich 80% was paid.Required:Contract account and Contractee’s account (8+2=10)

12. The following is the Balance Sheet of ABC Company Ltd. as on 31st December, 2014


Equity Shares of Rs.100 each

Preference Shares of Rs.100 each

10% Debenture

Bank Overdraft

Creditors

1,600,000

800,000

200,000

100,000

400,000

Goodwill

Plant

Freehold Properties

Building

Stock

Debtors

Profit and Loss

30,000

600,000

800,000

600,000

100,000

80,000

890,000

Total 3,100,000 Total 3,100,000

The following schemes of reconstruction were duly approved and applied:a. The equity shares to be reduced by Rs.50 per shareb. The preference share to be reduced to Rs.70 per sharec. The goodwill and profit and loss account are to be eliminated

d. The freehold property decreased by 50%e. The value of building increased by Rs.160,000

Required:Journal entries and revised balance sheet in the books of ABC Company Ltd (5+5=10)

13. The following particulars are extracted from the records of an office of NepalGovernment

Budget Heads Annual Budget Expenditure of Kartik Expenditure up toAshwin

Salary

TADA for official work

Office operating expenses

Office materials

Capital Assets

600,000

24,000

60,000

96,000

150,000

50,000

2,000

5,000

8,000

12,500

150,000

6,000

15,000

24,000

37,500

Additional information:a. An advance of Rs.5,000 for purchase of office materials not yet clearedb. Deposit received from a contractor of Rs.10,000 not yet settledc. Petty cash fund balance of Rs.500d. Loan to nearby office of Rs.12,000 not yet returnede. Total revolving fund received up to the end of Kartik of Rs.360,000Required: Expenditure report for the month of Kartik showing bank balance (10)

14 a. The following is the Receipts and Payments account of Kathmandu Sports Club for thecurrent year ended

Receipts Rs. Payments Rs.

To balance b/d

To Subscription

To Tournament fund

To Life membership fund

To Entrance fees

To Donation for building

To Sales of news paper

4,000

8,000

2,000

3,000

500

2,500

100

By News paper

By Rent

By Salaries

By Office expenses

By Sports equipment

By General expenses

By balance c/d

600

500

3,000

1,300

1,500

400

12,800


Additional information:Subscription outstanding for current year end was Rs.1,000 and previous year end was Rs.500.Sports equipments was valued Rs.500 on previous year end and Rs.1,000 on current year end.Outstanding office expenses for current year end was Rs.200

Required: Income and Expenditure account for current year end (5)

b. What are the features of non-profit organization? (5)

15 a. The total assets of the balance sheet of A Company Ltd. is Rs.405,000. The total assetsinclude goodwill of Rs.25,000, cash of Rs.25,000 and preliminary expenses of Rs.5,000. Theaccount payable is Rs.30,000. B Company Ltd. takes over the business of A Company Ltd. onthe following terms and conditions:i. Goodwill is valued at Rs.50,000 and other assets are considered with their book values and donot take over the cashii. Purchase consideration is to be discharged in the form of 2,500 fully paid equity shares ofRs.100 each and balance in cash.

Required: Amount of purchase consideration and mode of payment (5)

b. Explain in brief about the importance of single treasury accounting system of NepalGovernment. (5)

16. “Environment accounting at organization level aims to address the needs of organization tomeasure the economic efficiency of its environmental conservation and the business activities ofthe company as a whole”, discuss. (10)


17. The B Company Ltd. sells its business to the C Company Ltd. on December, 2013, on whichdate its balance sheet was as under:


Equity Shares of Rs.100 each

General reserve

Debenture

Creditors

Profit and Loss a/c

200,000

50,000

100,000

30,000

20,000

Goodwill

Freehold properties

Plant and tools

Stock

Debtors

Cash at bank

Bills receivable

50,000

150,000

83,000

35,000

27,500

50,000

4,500

Total 400,000 Total 400,000

The C Company Ltd. agreed to take over the assets (exclusive of cash at bank and goodwill) at10% less than the book value to pay Rs.75,000 for goodwill and to take over the debentures. Thepurchase consideration was to be discharged by the allotment to the B Company Ltd. of Rs.1,500shares of Rs.100 each at a premium of Rs.10 per share and the balance in cash. The cost ofliquidation amounted to Rs.3,000.

Required:a. Purchase considerationb. Journal entries in books of B Company Ltd.c. Journal entries in the books of C Company Ltd. (3+9+3=15)

18. The following Balance Sheets are presented:

Balance Sheet as on 31st March, 2014

Liabilities H. Co. S. Co. Assets H Co. S. Co.Equity Shares ofRs.100 eachGeneral ReserveProfit & Loss a/c14% DebentureCreditors

500,000100,00080,000

-75,000

200,000--

100,00045,000

Fixed AssetsStockDebtors14% Debenture inS. Co. acquired at parShares in S. Co. 1,500@ Rs.80 eachCash at bankProfit and Loss a/c

350,00090,00060,000

60,000

120,00075,000

-

150,00040,00030,000

-

-25,000

100,000Total 755,000 345,000 Total 755,000 345,000H. Co. acquired the shares on 1st August, 2013. The profit and loss a/c of S. Co. showed a debitbalance of Rs.150,000 on 1st April, 2013. During June 2013, goods costing Rs.6,000 weredestroyed against which the insurer paid only Rs.2,000. The creditors of S. Co. includeRs.20,000 for goods supplied by H. Co. on which H. Co. made a profit of Rs.2,000. Half of thegoods were still in stock on 31st March, 2014.

Required:Necessary working notes and consolidated balance sheet as on 31st March, 2014 (5+10=15)

19. “Forensic accounting encompasses litigation support, investigation and dispute resolutionand, therefore, is the intersection between accounting, investigation and law”, comment. (15)

***

1

Advanced Auditing

BBS 4th yearModel Question

Full Marks: 100Pass Marks : 35Time : 3 hrs


Brief answer questions:

Attempt ALL Questions: [10x2 = 20]

1. Mention any two objectives of auditing.

2. State any two methods of embezzlement of cash.

3. Point out the contents of audit note book.

4. Mention any two qualities required in a successful auditor.

5. Differentiate between internal audit and interim audit.

6. How would you vouch the Prepaid Insurance Premium?

7. Express whether the following are frauds or errors:

i) Destroying the carbon copy of the receipts

ii) Posting to wrong side of an account.

iii) Under-valuing the liabilities.

iv) Installation cost of machinery charged to profit and loss account.

8. Write how you would verify the 'Plant and Machinery'.

9. Point out the two important causes of charging depreciation.

10. State any two points that differentiate unqualified report with a qualified report.

Short answer questions

Attempt any FIVE Questions: [5X10 = 50]

11. Describe a system of internal check in respect of wage payments suitable for a largemanufacturing concern.

12. Giving reasons for the effects of the following transactions on the profitability, suggestrectifying entries for each of the transaction where necessary. (5x2=10)

i) Repair of machinery of Rs.35,000 was debited to the machinery account

2

ii) A sum of Rs.50,000 drawn by the proprietor for private travel was debited totravelling expenses account.

iii) Sales of old furniture at book value of Rs.25,000 was credited to sales account.iv) A credit purchase of Rs.30,000 was charged as Rs.3,00,000v) A loan of Rs. 5,00,000 received from Agricultural Development Bank was debited to

Bank Account.13. "Vouching is an essence of auditing". Explain the points to be borne in mind by an auditor

while examining vouchers.

14. State your opinion with reasons as an auditor, whether the following are capital or revenueexpenditure. (5x2=10)

i) A motorcycle valued Rs.2,00,000 was purchased in two installments: One ofRs.80,000 in cash and another of Rs. 1,20,000 after four months with interest 20%p.a.

ii) A part of the factory building was caught by fire. Company claimed Rs. 5,00,000from insurance company as compensation and charged the entire amount in profit andloss account of the year. Insurance Company admitted only Rs. 4,50,000.

iii) A TADA of Rs.1,00,000 was paid to an officer to go to Biratnagar for the publicity ofthe products and paid Rs.80,000 to DGM to purchase a mike for the advertisement ofthe products.

iv) Rs. 10,000 and Rs.1,50,000 paid insurance premium against loss of stock and loss ofcomputers respectively.

v) A compensation of Rs.2,00,000 was paid to an employee for being handicapped dueto an accident within the factory premises.

15. A) As an auditor, what advice you would give on the following decision taken by the Boardof Directors? [2.5 + 2.5]

a) Depreciation on building is not charged on the ground that Rs. 2,00,000 has beexpanded for repair of the building this year.

b) Depreciation of Rs.1,00,000 is not charged to machinery because of insufficientamount of the company to distribute dividend to shareholders.

B) Give your opinions as an auditor, whether the following are Reserve or Provisions?[5x1]

i) Amount set aside for paying income tax.

ii) Amount set aside for equalizing dividend

iii) Amount set aside to pay compensation on disputed land

iv) Amount set aside for contingencies

v) Amount of surplus on the revaluation of fixed assets

16. A) Enumerate the major responsibilities of Financial Comptroller General Office. [5]

B) State the purpose of Auditing Standard. Explain any two such standard covered byAuditing Standard in Nepal. [5]

3

Comprehensive Questions

Attempt any TWO Questions [2X15 = 30]

17. "It is said that the efficiency of an auditor depends upon 1) his knowledge of law andaccounts, 2) his tact and patience and 3) the strength of his common sense". Comment.

18. What do you understand by verification? Distinguish clearly between the term 'Vouching','Verification' and 'Valuation'.

19. Under what circumstances would you as an auditor consider it necessary to qualify yourreport? Draft a qualified report mentioning therein at least three reasons which have led youto give such a report.

(Note: The students should not limit themselves to the chapters mentioned in this Model Questionsas questions can be asked from any chapter (within the syllabus) in the examination.)

Budgeting and Control of ProfitBBS 4th Year


Pass Marks: 35




1. What is the purpose of planning calendar?2. State any two objectives of cash planning and control.3. Differentiate between strategic and tactical sales planning.4. Explain the meaning of learning curve.5. What is meant by post-completion audits?

6. The data regarding the sale of commodity by a retail shop are as under.

Total stock needed Rs.82,000Total stock available Rs.13,000Initial make-up on retail 40%

Required: Open-to-buy at cost

7. The cash flows during the expected life of the machines are given below:

Years 0 1 2 3 4 5

Cash Flows(Rs.)

25,000 9,000 8,000 7,000 6,000 5,000

Required: Payback period

8. Sales plan summary for a product of a company is as underMonths J F MSales units 5000 6000 6000The company has a stable production policy. Additional data for inventory are as follows.Opening inventory for January is 2000 units and closing inventory on March is 3000units.Required: Production budget for three months

9. ABC Company is a manufacturer of best quality of Mobile set. The sales managerestimated that sales in a last month of coming year will be 2000 sets of mobile. He also

predicts that sales will grow by 200 sets of mobile each month. The selling price permobile is Rs.5000.Required: Sales Budget for first four months

10. The sales for different months are

Month Baishak Jestha Ashad ShrawanSales revenue 600,000 700,000 400,000 300,000The gross profit margin on sales will be 40%. The desired ending inventory of merchandise willbe equal to meet next month’s sales need. Beginning inventory of merchandise was Rs.360,000.

Required: Merchandise purchase budget for the three months ending Ashad


11. Budget goal for department A for the period are as follows (assume no inventory change)

Planned sales Rs.20000Planned discounts Rs.1000Planned stock shortage Rs.400Required:i. the planned initial markup % that should be planned to attain gross margin of 60% on sales.ii. the planned gross margin % assuming a planned initial markup 70% (5+5=10)

12. A company Ltd. manufactures two products X and Y. Both products are processed throughprocess I and II and Product X through Process II. The Company prepares a quarterly productionplan. The planned data developed are as under:

a. Planned production units:

Month Baisakh Jestha AshadProduction X 1,000 2,000 2,000Production Y 2,000 3,000 2,000b. Direct labour hours planned per unit of product:

Production Process I Process II Process IIIX 0.2 0.4 0.5Y 0.3 - 0.4c. Average wage rate planned per DLH:

Process I Rs. 4 per DLHProcess II Rs. 5 per DLHProcess III Rs. 4 per DLH

Actual data for process I for the month Baisakh, for product X was:Production Units 900 unitsDirect labor Hours 190 HoursDirect labor Cost Rs. 855

Required:i. Direct Labor Cost Budgetii. Performance Report of Process I for the Product X for the month Baisakh. (7+3=10)

13. A machine purchased five years ago for Rs 2,00,000 had a projected life of 10 years. Themachine can be sold today for Rs.2,20,000 and in 5 years, Rs.10,000. The company isconsidering the replacement of this machine by new one costing Rs.3,60,000. It will havea five years life with Rs. 20,000 salvage value. Its transportation and installation cost isRs.5,000 each. The new machine will require additional working capital of Rs.10000.The new machine yields annual surplus of Rs. 80,000 after charging depreciation beforetax. The capital gain and normal gain tax rate are 15% and 25% respectively. Themachine is being depreciated on a straight line basis and its cost of capital is 12%.Required: Should the company replace the existing machine? Give your decision byusing net present value and internal rate of return

(10)14 a. A firm has produced and sold two product A and B. Below are the given some data

relating themA B

Percentage of variable cost on sales

Sales mix in volume

Selling price per unit

70%

30%

Rs.50

60%

70%

Rs.40

The overall fixed cost for the firm is Rs.37,000Required: i) Overall break-even point in Rs,

ii) Overall break-even point in unitsiii) Sales amount to earn Rs.20,000 profit (5)

b. What do you mean by margin of safety? Why is it important to management? (2+3=5)

15 a. The annual budget data for two similar companies are as follows

Company A Company B

Sales Rs. 400000 400000Variable Cost 120000 200000Fixed Cost 200000 320000 120000 320000Profit 80000 80000

Required: Evaluate and compare the economic characteristics of the two companies (5)

b. What is JIT? What are its implications for the budgeting process in a profit planningand control? (2+3=5)

16. “Performance reports constitute an important part of internal management controlprocedures”, discuss. (10)


17. The activity base and annual departmental overhead budget of a company are as under:

Departments Activity-base Overhead (Rs)Production Department X Direct Machine Hour 20,400Production Department Y Direct Machine Hour 29,700Service Department Direct Repair Hour 13,400

The company manufactures two products P and Q. The planned production and direct labor costfor the production are as follows.

Product Planned Production Direct Material Direct LaborP 3,000 units Rs. 50,000 Rs. 45,000Q 2,000 units Rs. 70,000 Rs. 40,000The company establishes the following standard for planning purpose.

Production Department X 0.3 Direct Machine Hour for each unit of product P0.4 Direct Machine Hour for each unit of Product Q

Production Department Y 0.7 Direct Machine Hour for each unit of Product P0.6 Direct Machine Hour for each unit of Product Q

Service Department 0.2 Direct Repair Hour for 1 DMH for ProductionDepartment X0.1 Direct Repair Hour for 1 DMH for ProductionDepartment Y

Required:a. Computation of volume of work or activityb. Overhead rate for production department.c. Total cost of goods manufactured for each product. (3+6+6=15)

18. A manufacturing company in a process of completion of profit planning gathered thefollowing information about its assets, liabilities, further sales, production and purchases:

Balance Sheet as on 31st Chaitra, 2071

Liabilities Rs. Assets Rs.Shareholder's equity 500,000 Fixed assets 450,000Accounts payable 30,000 Inventory:

Finished goods 10,000 unitsRaw material 30,000 units

100,000120,000

Bank loan (Payable Rs.15,000 per month withinterest @ 12%)

200,000 Accounts Receivable

Cash

40,000

20,000Total 730,000 Total 730,000The Sales, Production and Purchases for 2072 are:

Baisakh Jestha Ashadh TotalSales units 10,000 12,000 12,000 34,000Production units 12,000 12,000 15,000 39,000Wages andmanufacturingexpenses (Rs.)

60,000 60,000 75,000 195,000

Materialpurchase units

30,000 37,500 30,000 97,500

Purchasesamount (Rs.)

120,000 150,000 120,000 390,000

The selling price per unit is Rs.20; company's sales are mostly on cash. Experience shows that80% of sales are in cash and remaining 20% on credit of 30 days. Operating expenses are 12% ofgross sales, which will be paid at the time when due. Each unit of finished goods needs 2.5 unitsof raw materials. 50% of purchases are on cash and credit purchases are paid after 1 month. Thecompany has a policy of maintaining a minimum cash balance of Rs.20,000. If the cash is notsufficient, company can take loan from bank at 12% interest rate per annum. All the borrowingsand payments are made in the multiple of Rs.5,000 and interest will pay at the time of loanpayment in the multiple of Rs.100. Depreciation on fixed assets is 10% per year.

Required:a) Cash collection and disbursement budget for first three months of 2072b) Budgeted Income Statement for three months ending Ashadc) Budgeted Balance Sheet for three months ending Ashad. (7+4+4=15)

19. “Zero-based budgeting is prepared by assuming that the budget is being initiated for thefirst time”. Do you agree with this statement? Write your answer differentiating zero-basedbudgeting with traditional budgeting. (9+6=15)

***

MKT 251: Customer Relationship ManagementBBS 4th Year


Group-ABrief Answer QuestionsAttempt All Questions (10X2=20)

1. Make clear the concept of CRM.2. What do you understand by customer care and delighting?3. What is attitudinal component of customer loyalty?4. Why customer retention is so important in marketing?5. Explain the term customer satisfaction?6. State the steps of developing customer service strategy.7. Clearly explain customer care and delighting programs?8. Explain the internal and external sources of customer data?9. Point out clearly the costs of poor service and poor quality.10. List out the methods of managing customer service.

Group-B

Descriptive Answer Questions. (5X10=50)Attempt any Five Questions.11. Discuss the value of customer relationship management

to the organization and to the customers. (5+5=10)12. What is customer loyalty? Explain its importance with suitable examples.

(4+6=10)13. What customer retention strategies can you apply to retain customers in a business organization?

(10)14. Explain the methods of customer satisfaction survey.

(10)15. Show your acquaintance with customer retention and discuss its importance to the marketer.

(4+6=10)16. What is data warehousing? Discuss its steps.17. Write short notes on Any Two

1. Customer life cycle2. Total service quality3. Customers’ complains.

Group-CAnalytical Answer Questions (2x15=30)Attempt any Two Questions:

18. Discuss how customer relationship management is being implemented in Nepal?(15)

19. What do you understand by triangular relationships in Customer Satisfaction? Discuss with suitableexamples. (5+10=15)

20. What is customer service planning? How do you develop the customer service strategy? Discuss. (5+10)

MKT252: Foreign Trade & Export Promotion in NepalBBS 4th Year


Group – ‘A’

Brief Answer Questions (10×2=20)Attempt All Questions

1. Write down the nature of foreign trade.2. State types of tariffs and Non-tariff barriers.3. What are import control measures in Nepal ?4. Show your acquaintance with the terms EPZ & SEZ.5. Write down the stages of export procedures ?6. Write down the full form of ASEAN & BIMNST-EC.7. Give the meaning of export finance.8. Mention characteristics of Land-locked countries.9. Write down any ten names of products banned for export in Nepal.10. Point out the factors affecting export promotion.

Group – ‘B’

Descriptive Answer Questions (5×10=50)Attempt any Five Questions

11. Explain the role of foreign trade in economic development of the country (10)12. Explain the nature and components of commercial policy of Nepal (10)13. Discuss the concept of balance of payments. Also explain the causes of widening the balance of

payments in Nepal (4+6)14. Explain the types of export finance. Also explain, how is the situation of export credit and

financing in Nepal (4+6)15. Discuss the nature of transit problems (10)16. Explain the role of BIMNST-EC in export liberalization in member countries (10)17. Give short notes on ANY TWO:

1 Role of Federation FNCCI (5)2 Characteristics of LDCs (5)3 Types of export payment.

Group – ‘C’

Analytical Answer QuestionsAttempt any Two Questions. (2×15=30)

1. Clear about the diversification of Nepal’s foreign trade. Explain the role of foreign trade in economicdevelopment in Nepal. (5+10)

2. Write down principles of SAARC agreement. How can Nepal be benefitted ? (4+6)3. Identify potential export products from Nepal. Also describe, how those products have competitive

strength from Nepal? (5+10).

MKT253: Fundamentals of AdvertisingBBS 4th Year


Group – ‘A’

Brief Answer Questions (10×2=20)Attempt All Questions

1. Give the meaning of marketing communication.2. What is trade advertising?3. State any four types of advertising agency.4. What are the essentials of a good advertising copy?5. Write down the full form of USP and MECCA.6. Mention the process of media planning.7. Show your acquaintance with the terms ‘reach’ and ‘frequency’.8. Give the meaning of pre-testing.9. What is jingle?10. Point out the factors affecting advertisement budget size.

Group – ‘B’

Descriptive Answer Questions (5×10=50)Attempt any FIVE Questions

11. What is advertising? What are the elements of advertising? Explain. (4+6)12. Explain the criteria for selecting appropriate advertising agency. (10)13. Describe the visualization process for creative advertisement. (10)14. Discuss the head and heart model of message design. (5+5)15. Show your acquaintance with the term ‘advertising appeal’ and also explain the essentials of good

appeal. (4+6)16. Give the concept of media scheduling. Also discuss the methods of media scheduling. (4+6)17. Give short notes on any TWO:

i. Role of Advertising Association of Nepal (5)ii. Characteristics of radio (5)

iii. Slogan in advertising (5)

Group – ‘C’

Analytical Answer QuestionsAttempt any TWO Questions.

(2×15=30)18. Define advertising. Explain the importance of advertising to firms and society. (5+10)19. What advertisement layout? Discuss the principles of good advertisement layout. (5+10)20. Give the meaning of advertisement budgeting. What are the methods of establishing advertising

budget? Describe. (5+10)

MKT-254 : Fundamentals of Service Marketing

BBS 4th Year


Group-“A”

Brief Answer Questions (10 X 2 = 20 )Attempt All Questions

1. What are the differences between Goods and Services?2. Point out the extended marketing mix in services.3. State the importance of relationship marketing in service.4. Give the importance of relationship marketing.5. Point out the process of market segmentation.6. Give the meaning of service quality and satisfaction.7. What are the key considerations for service pricing?8. State the objectives of promotion for service product?9. Point out the key intermediaries for service delivery.10. Show your acquaintance with the term ‘internal communication’.

Group – “B”

Descriptive Answer Questions (5 X 10 = 50 )Attempt any Five Questions

11. Give the meaning of service and also explain its characteristics. ( 4+ 6 )12. Discuss the importance of service marketing. ( 10 )13. Discuss the factors influencing buyer’s behavior in service marketing context. ( 10 )14. What do you know about customer expectation? What are the factors influencing customer expectations.

( 4 + 6 )15. Explain the market segmentation strategies for service products. ( 10 )16. Describe the challenges of service sector in Nepalese context. ( 10 )17. Describe the role of internet in global distribution system. ( 10 )

Group – “C”

Analytical Answer QuestionsAttempt any Two Questions.

(2x 15 = 30)18. Discuss the servqual model for measuring the service quality and also explain how it helps marketers to

deliver quality service. ( 5 + 15 )19. What is service positioning? Explain the positioning strategies used in service marketing. (5+ 10)20. What is new service product? Describe the process of new service product development in the target

market. ( 5 + 10 )

Model Question FIN 250-2072 1

Fundamentals of Corporate FinanceModel Questions – 2072

Program: BBS Time: 3 HoursPart: IV F.M.: 100Code: FIN 250 P.M.: 35

Candidates are required to give the answers in their own words as far as practicable. Figures in themargin indicate the full marks.Group ABrief Answer QuestionsAttempt All questions from Group A (10 x 2 = 20)

1. Define corporate social responsibility with example.

2. What do you mean by agency problem? List out the parties involved in agency problem.

3. What are three different ways capital is transferred between savers and borrowers?

4. What is a yield curve?5. Differentiate between primary and secondary markets.6. Why does a firm include call provision in bond issue?7. Why is preferred stock called hybrid security?8. A call option on Birat company’s stock has a market price of Rs 7. The stock sells for Rs 30

a share, and the option has an exercise price of Rs 25 a share. What is the exercise value ofthe call option?

9. What will be annual installment for the loan for Rs 500,000 if interest rate is 10%and that the loan period is 3 years?

10. The Shikhar Company needs to raise Rs 20 million to finance its expansion into newmarkets. The company will sell new shares of equity via a general cash offering to raisethe needed funds. The offer price is Rs 90 per share and the company's underwriterscharge an 5 percent spread. How many shares need to be sold?

Group BDescriptive Answer Questions

Attempt any Five questions from Group B (5 x 10 = 50)

11. What do you mean by Multinational Corporation? Describe the reasons for corporation goingglobal? [4+6]

12. Is synergy a valid rationale for mergers? Describe several situations that might producesynergistic gains. [4+6]

13. Assume that the real risk-free rate is 3.5 percent and default risk premium is zero. The nominalrate of interest on 1-year bond is 5 percent and that on comparable risk 2-year bond is 6 percentand a 3-year bond is 9 percent, which includes the maturity risk premium of 1.5 percent.

a. Using the expectation theory, forecast the interest rate on a 1-year bond during thethird year.


b. What is the expected inflation rate in year 1, 2, and 3?

c. Comment on the causes why average interest rate is different from interest rate in year2 and 3. [4+4+2]

14. Firms HL and LL are identical except for their leverage ratios and the interest rates they pay on debt.Each has Rs 20 million in assets, has Rs 4 million of EBIT, and is in the 40% tax bracket. Firm HL,however, has a debt ratio of 50% and pays 12% interest on its debt, whereas LL has a 30% debt ratio andpays only 10% interest on its debt.

a. Calculate the rate of return on equity (ROE) for each firm.b. Observing that HL has a higher ROE, LL’s treasurer is thinking of raising the debt ratio from30% to 60% even though that would increase LL’s interest rate on all debt to 15%. Calculate thenew ROE for LL. [6+4]

15. Himalaya Herbal Company’s 2012 financial statement s are shown below:Balance Sheet as of December 31, 2012 (Thousands of Rupees)

CashReceivablesInventory

Rs 1,80010,80012,600

Accounts payableNotes payableAccruals

Rs 7,2003,4722,520

Total current assetsNet fixed assets

Rs 25,20021,600

Total current liabilitiesMortgage bondsCommon stockRetained earnings

Rs 13,1925,0002,000

26,608Total assets Rs 46,800 Total liabilities and equity Rs 46,800

Income Statement for year ended December 31, 2012 (Thousands of Rupees)SalesOperating costs

Rs 36,00030,783

Earnings before interest and taxesInterest

Rs 5,2171,017

Earnings before taxesTaxes (40%)

Rs 4,2001,680

Net income Rs 2,520Dividends (60%)Addition to retained earnings

Rs 1,512Rs 1,008

a. Assume that the company was operating at full capacity in 2012 with regard to allitems except fixed assets; fixed assets in 2012 were being utilized to only 75 percentof capacity. By what percentage could 2013 sales increase over 2012 sales withoutthe need for an increase in fixed assets?

b. Now suppose 2013 sales increase by 25 percent over 2012 sales. How muchadditional external capital will be required? Assume that the company cannot sell anyfixed assets and any required financing is borrowed as notes payable.

[5+5]

16. Suppose, a vacationing American tourist, Mr Ralph flies from New York to London, then to Paris,then on to Munich, and finally back to New York. When he arrives at London he knew U.S. dollar is $1.5944 per pound from the foreign exchange listing. He exchanges $ 20,000 for pound and spends754.339 British pounds while there in London. Then he went to France and exchanged his remainingBritish pound for French francs. He observed indirect quotation between francs and dollars in FF 4.9675.


a. What is the cross rate between pounds and francs? How much he would receive infrancs for $ 500?

b. After completing his visit in France and he arrives in Germany, and need Germanmarks. The dollar basis quotes are FF 4.9675 per dollar and DM 1.4033 per dollar.What is the cross rate between marks and francs? If he had FF 2,000 remaining, howmuch marks he would receive?

c. Finally he returns to New York after vacation ends. If he holds 50 marks and needdollar, what is the indirect quote rate of dollar per mark? What amount of dollar hewould receive? [4+3+3]

Group CAnalytical Answer Questions

Attempt any Two questions from Group C (2 x 15 = 30)17. What are the reasons companies might use risk management techniques? How should derivatives beused in risk management? Explain. [6+9]

18. Sunlight Sailboats estimates that due to the seasonal nature of its business, it will require anadditional Rs 2,000,000 of cash for the month of July. Sunlight has three options available to provide theneeded funds. It can

1. Establish a one–year line of credit for Rs 2,000,000 with a commercial bank. The commitmentfee will be 0.5 percent, and the interest charge on the used funds will be 15 percent per annum.The minimum time the funds can be used is 30 days.

2. Forego the July trade discount of 2/10, net 40 on Rs 2,000,000 of accounts payable.3. Issue Rs 2,000,000 of 60-day commercial paper at a 14 percent per annum interest rate. Since

the funds are required for only 30 days, the excess funds (Rs 2,000,000) can be invested in 12percent per annum marketable securities for the month of August. The total transaction fee onpurchasing and selling the marketable securities is 0.5 percent of the fair value.

a. Which financial arrangement results in the lowest rupees costs?b. Is the source with the lowest expected cost necessarily the source to select? Why or why not?

[4*3 +3]

19. The stock of the National Corporation is selling for Rs 50 per share. The company then issuesrights to subscribe to one new share at Rs 40 for each five rights held.a. What is the theoretical value of a right when the stock is selling rights-on?b. What is the theoretical value of one share of stock when it goes ex-rights?c. What is the theoretical value of a right when the stock sells ex-rights at Rs 50?d. Shiva Khanal has Rs 1,000 at the time National stock goes ex-rights at Rs 50 per share. He

feels that the price of the stock will rise to Rs 60 by the time the rights expire. Compute hisrate of return on his Rs 1,000 if he (1) buys National stock at Rs 50, or (2) buys the rights atthe price computed in part c, assuming his price expectations are valid.

e. Do you think investment in rights is riskier than the investment in stock of the samecompany? Justify. [5x3]

***

Model Question FIN 252 -2072 1

Foundation of Financial Markets and InstitutionsModel Questions – 2072


Candidates are required to give the answers in their own words as far as practicable. Figures inthe margin indicate the full marks.

Group ABrief Answer Questions

Attempt All questions from Group A (10 x 2 = 20)

1. Define financial assets and tangible assets, and give examples.

2. Name three widely accepted goals of monetary policy. Explain one in brief.3. How do you differentiate the participating policies from nonparticipating policies?4. What do you mean by load? Explain with example.5. Interpret Fisher's equation.6. Describe briefly the features of municipal bond.7. What is efficient capital? Explain operationally efficient market briefly.8. What is Eurobond?

9. When do investors engage in short selling?10. If the value of equity is Rs 10 million, value of assets is Rs 100 million, what is the

value of the liabilities?



11. What are the roles of financial intermediaries? Explain.12. Suppose Nepal Rastra Bank were to inject Rs 100 million of reserves into the banking

system by an open market purchase of Treasury bills. If the required reserve ratio were10%, what is the maximum increase in M1 that the new reserves would generate?Assume that banks make all the loans their reserves allow, that firms and individualskeep all their liquid assets in depository accounts, and no money is in the form ofcurrency.

13. Define the pension funds and explain the different types of pension funds. (2 +8)

14. The market price of the stock of Annapurna Company is Rs 50 per share and there areone million shares outstnading. Suppose that the management of this company isconsidereing a rights offering in connection with the issuance of 500,000 new shares.Each current shaereholder would receive one right for every two shares owed. The terms


of the rights offering are as follows: For two rights and Rs 30 (the subcription price), anew share can be acquired.

a) What would be the share price be after the rights offering?

b) What is the value of one right?

(5+5)

15. Suppose that the price of a Treasury bill with 90 days to maturity and a Rs 1 million facevalue is Rs 980,000.

a) What is the bank discount?

b) What is the yield on a bank discount basis?

(5+5)

16. Calculate the risk-weighted assets from the information given bellow:

Assets Book Value in Million Risk Weight (in %)Treasury securities 150.00 0Local government bonds 100.00 20Mortgage 250.00 50Commercial loan 500.00 100Total 1000.00


Attempt any Two questions from Group C (2 x 15 = 30)

17. What is insurance? Explain the nature of business of different types of insurance.(3+12)

18. (a) An investment company has Rs 1.05 million of assets and Rs 50,000 of liabilities, and10,000 shares of outstanding.

i) What is its net asset value (NAV)?

ii) Suppose the fund pays off its liabilities while at the same time the value of its assetsdouble. How many shares will a deposit of Rs 5,000 receive?

iii) Differentiate closed-end funds from open-end funds?

(3+3+4)

(b) Suppose you own a bond that pays Rs 75 yearly in coupon interest and that is likely tobe called in two years (because the firm has already announced that it will redeem theissue early). The call price will be Rs2,050. What is the price of your bond now in themarket if the appropriate discount rate for this asset is 9%?

(5)

19. Consider the following fixed-rate, level payment mortgage:

Maturity: 360 months

Amount borrowed: Rs 100,000

Annual mortgage rate: 10%


a) Construct an amortization schedule for the first 10 months.

b) What will the mortgage balance be at the end of 360th month, assuming noprepayments?

c) Without constructing an amortization schedule, what is the mortgage balance at theend of month 270, assuming no prepayments?

d) Without constructing an amortization schedule, what is the scheduled principalpayment at the end of month 270, assuming no prepayments?

(6+3x3)

***

MKT 250: Fundamentals of SellingBBS 4th Year

Model Question

Candidates are required to give their answers in their own words as far as practicable.

Full Marks: 100Pass Marks: 35

Group “A”

Brief answer questions[10 x 2 = 20]

1. State the nature of selling.2. What are the qualifications for success in sales job?3. Differentiate between verbal and non-verbal communications.4. Give your opinion on customer care and satisfaction.5. Mention the importance of developing goodwill.6. Highlight the problems of establishing sales quotas.7. State the interview techniques used in the selection of sales force.8. Why do you think selling abroad is difficult?9. State the methods for improving relations with the non-buyers.10. Do you think sales personnel should be controlled through supervision? Why or why not?

Group “B”

Descriptive answer questions [5 x 10 = 50]Attempt any five questions

11. What is communication? Explain the factors affecting effective communication.12. Discuss the needs and methods of handling customer complaints.13. Explain the methods of setting sales quotas.14. What are the tasks of sales force management? Discuss.15. Explain the need or reasons for establishing sales territories.16. What are the tools for sales control and analysis? Explain.17. Write short notes on any two:

(a) Major tools in international sales(b) Elements of territory management(c) Factors affecting consumer buying decisions

Group “C”

Analytical answer questions [2 x 15 = 30]Attempt any two questions

18. What are the various steps involved in the process of sales? Discuss in detail.19. What are the methods of measuring sales organization effectiveness? Describe.20. Describe the theoretical basis of sales job.


Commercial Bank ManagementModel Questions – 2072


Candidates are required to give the answers in their own words as far as practicable. Figures in themargin indicate the full marks.



1. What are the aspects of internal performance of a commercial bank? Explain any one.2. Define the dollar gap and illustrate it with an example.3. What is aggressive investment strategy?4. Why do we use credit scoring models?5. Nabil Bank Ltd. committed Rs 5 million loans and it charges .05 percent commitment

charge. What is the commitment charge?6. What is balloon loan?7. List common ratios that are used to measure the bank liquidity position. Illustrate any one of

them with suitable example.8. Differentiate currency swap from interest swap.

9. List out the principal retail electronic banking products.10. What is meant by securitization?



11. What are the principal goals of a commercial bank? How does profitability of a bank affect thisgoal? (6+4)

12. ABC Bank Ltd reports total interest revenue of Rs 86.42 million, total interest expenses of Rs58.62 million, provision for loan losses of Rs 3.6 million, total noninterest revenue of Rs 15.61million, total noninterest expenses of Rs 28.60 million, and an income tax rate of 30 percent.Total assets are Rs 842.16 million.a) What is ABC Ltd's net interest income?b) What is its net interest margin?c) What is its Return on assets?d) What is its asset utilization ratio?e) What is its profit margin ratio?

(2x 5= 10)

13. A municipal bonds selling at par has a yield-to-maturity equal to 10 percent. A bank investmentmanager wishes to calculate its tax equivalent yield. Assume that it is a qualified bonds, thebank's tax rate is 34 percent, and the average cost of funds for the bank is 8 percent. If the bondwas not qualified, what would be the answer?


14. Suppose you are evaluating the loan applicants for short term loans. What are the relevant ratiosused to evaluate the applicant's financial position?

15. A Rs 500,000 loan is made for 90 dyas at 8 percent per annum. Compute the effective yieldusing (a) 360 day year and (b) 365 day year. (5+5)

16. Given the following information:

Assets Liabilities and Equity

Rate-sensitive Rs 200 (12%) Rate-sensitive Rs 300 (6%)

Non-rate sensitive 400 (11%) Non-rate-sensitive 300 (5%)

Nonearning 100 Equity 100

Total assets Rs 700 Total liabilities and equity Rs 700

i) What is the gap?

ii) How much will net interest income change if interest rates fall by 200 basis points?

iii) What changes in portfolio composition would you recommend to management if youexpected interest rates to increase? (3x2+4)



17. Why two banks so heavily regulated? Discuss with reference to the salient features of Bank andFinancial Institutions Act, 2006. (5+10)

18. Average costs of funds for ABC Bank Ltd in 2015 are as follows:

Sources of Funds Average Amount Availablefor Investment (Rs millions)

Average Cost (%)

Deposits:Demand depositsInterest bearing checkingPassbook savings

Small CDsLarge CDsEurodollar CDs

Non-depositsBorrowing from central bankReposDiscount widow advancesOther liabilities

Stock holders equity

Rs 15.0030.0010.0020.0030.005.00

6.0010.00

4.0012.0012.00

5.00%7.008.009.0010.0010.40

8.008.507.5010.0015,00

a) What is the weighted average cost of deposit funds?b) What is the weighted average cost of nondeposit funds?c) Why cost of nondeposit funds is less than the cost of deposit funds?d) What is the overall cost of total funds?e) Which sources of funds had average costs that exceeded the weighted average cost of capital? (3

x5)


19. Following are the information of a hypothetical commercial bank ( Rs in thousands):

Common Stock Rs 30,000

Perpetual preferred stock 5,000

Surplus 2,000

Undivided profit 100,000

Capital reserves 1,000

Reserves for loan and lease losses 5,000

Subordinated notes and debentures 2,000

a) What is Tier 1 capital?

b) What is Tier 2 capital?

c) What is the total capital?

d) If the bank has total risk weighted assets (in thousands) of Rs 2,840,000, does it haveadequate capital under regulatory standard?

e) If risk adjusted assets equal Rs 2,000,000 (thousand), is capital adequate? (5x3)

***


Fundamentals of InvestmentModel Questions – 2072

Program: BBS Time: 3 HoursF.M.: 100

Code: FIN 253 P.M.: 35

The objective of the model questions is to give an overview of the nature of questions that may be asked inthe examination. The users of the model are requested to take note of the followings:

Questions will be divided into three groups. There will be 10 questions carrying two marks eachin Group A. Students will have to attempt all questions in this group. Group B consists of sixquestions carrying 10 marks each. Out of them students will attempt only five questions. AndGroup C consists of three questions carrying 15 marks each, out of which students will attempttwo questions. This structure of questions will be maintained unless otherwise decided andnotified.

Questions in each Group may consist of both theory and numerical questions. But, please notethat the proportion of theory and numerical given in the model is only an indication which mayvary from time to time.

Candidates are required to give the answers in their own words as far as practicable. Figures in themargin indicate the full marks.



1. Describe the investment process.

2. List important investment vehicles available in Nepal.

3. Differentiate between broker market and dealer market.

4. Describe briefly the criteria for selecting a suitable broker.

5. Briefly describe the pros and cons of using internet as investment tool.

6. Define and give examples of diversifiable and nondiversifiable risk.

7. What is call option?

8. Using semiannual compounding, find the price of a 7 percent, 10-year bond priced to yield 8percent.

9. Your portfolio has a beta equal to 1.3. It returned 12 percent last year. The market returned10 percent; the risk-free rate is 6 percent. Calculate Treynor’s measure for your portfolio andthe market.

10. Why is Jensen’s measure (alpha) generally preferred over the measures of Sharpe andTreynor for assessing portfolio performance?




11. What are the main investment attractions of put and call options? What are the risks?

12. Marlene Bellamy purchased 300 shares of Writeline Communications stock at $55 per share,using the prevailing minimum initial margin requirement of 50%. She held the stock for exactly 4months and sold it without any brokerage costs at the end of that period. During the 4-monthholding period, the stock paid $1.50 per share in cash dividends. Marlene was charged 9% annualinterest on the margin loan. The minimum maintenance margin was 25%.

a. Calculate the initial value of the transaction, the debit balance, and the equity positionon Marlene's transaction.

b. For each of the following share prices, calculate the actual margin percentage, andindicate whether Marlene's margin account would have excess equity, would berestricted, or would be subjected to a margin call.

(1) $45

(2) $70

(3) $35

13. Carla Sanchez wishes to develop an average or index that can be used to measure the generalbehavior of stock prices over time. She has decided to include 6 closely followed, high-qualitystocks in the average or index. She plans to use August 15, 1981, her birthday, as the base and isinterested in measuring the value of the average or index on August 15, 2005, and August 15,2008. She has found the closing prices for each of the 6 stocks, A through F, at each of the 3 datesand has calculated a divisor that can be used to adjust for any stock splits, company changes, andso on that occurred since the base year, which has a divisor equal to 1.00.

Closing stock price

Stock August 15,2008

August 15,2005

August 15,1981

A $ 46 $ 40 $ 50

B 37 36 10

C 20 23 7

D 59 61 26

E 82 70 45

F 32 30 32

Divisor 0.70 0.72 1.00

Note: The number of shares of each stock outstanding has remained unchanged at each of the3 dates. Therefore, the closing stock prices will behave identically to the closing marketvalues.

a. Using the data given in the table, calculate the market average, using the samemethodology used to calculate the Dow averages, at each of the 3 dates–the 15th ofAugust 1981, 2005, and 2008.

b. Using the data given in the table and assuming a base index value of 10 on August 15,1981, calculate the market index, using the same methodology used to calculate theS&P indexes, at each of the 3 dates.


c. Use your findings in part a and b to describe the general market condition–bull or bear–that existed between August 15, 2005, and August 15, 2008.

d. Calculate the percentage changes in the average and index values between August 15,2005, and August 15, 2008. Why do they differ?

14. Rose Berry is attempting to evaluate 2 possible portfolios consisting of the same 5 assets but heldin different proportions. She is particularly interested in using beta to compare the risk of theportfolios and, in this regard, has gathered the following data:

Portfolio Weights (%)Asset Asset

BetaPortfolio A Portfolio

B1 1.30 10 302 0.70 30 103 1.25 10 204 1.10 10 205 0.90 40 20

Total 100 100a. Calculate the betas for portfolios A and B.

b. Compare the risk of each portfolio to the market as well as to each other. Whichportfolio is more risky?

15. Assume that the following quote for the Alpha Beta Corporation (a NYSE stock) was obtainedfrom the Thursday, April 10, issue of the Wall Street Journal.

254.00 150.50 AlphaBet 6.00 3.1 15 755 189.12 3.88

Given this information, answer the following questions.

a. On what day did the trading activity occur?

b. At what price did the stock sell at the end of the day on Wednesday, April 9?

c. What is the firm's price/earning ratio? What does that indicate?

d. What is the last price at which the stock traded on the date quoted?

e. How large a dividend is expected in the current year?

f. What are the highest and lowest prices at which the stock traded during the latest 52-week period?

g. How many shares of stock were traded on the day quoted?

h. How much, if any, of a change in price took place between the day quoted and theimmediately preceding day? At what price did the stock close on the immediatelypreceding day?

16. You've uncovered the following per-share information about a certain mutual fund.

2006 2007 2008

Ending share prices:

Offer $46.20 $64.68 $61.78

NAV 43.20 60.47 54.75

Dividend income 2.10 2.84 2.61


Capital gains distribution 1.83 6.26 4.32

Beginning share prices:

Offer 55.00 46.20 64.68

NAV 51.42 43.20 60.47

On the basis of this information, find the fund's holding period return for 2006, 2007, and2008. (In all 3 cases, assume you buy the fund at the beginning of the year and sell it at theend of each year.) In addition, find the fund's average annual compound rate of return overthe 3-year period, 2006-2008. What would the 2007 holding period return have been if theinvestor had initially bought 500 shares of stock and reinvested both dividends and capitalgains distributions into additional shares of the fund at an average price of $52.50 per share?



17. What appeal do bonds hold for individual investors? How might you, you as a bond investor, useinformation about the term structure of interest rates and yield curves when making investmentdecisions?

18. Over the past 5 years, Molly has slowly built a diversified portfolio of common stock. Currentlyher portfolio includes 20 different common stock issues and has a total market value of $82,500.Molly is at present considering the addition of 50 shares of one of two common stock issues – Xor Y. To assess the return and risk of each of these issues, she has gathered dividend income andshare price data for both over each of the last 5 years (204 through 2008). Molly’s investigationof the outlook for these issues suggest that each will, on average, tend to behave in the future justas it has in the past. She therefore believes that the expected return can be estimated by findingthe average holding period return over the past 5 years for each of the stocks. The historicaldividend income and stock price data collected by Molly are given in the accompanying table.

Stock X Stock Y

Share price Share price

Year Dividendincome

Beginning Ending Dividendincome

Beginning Ending

2004 1.6 23 26 2 22 23

2005 1.7 26 25 2.1 23 23

2006 2 25 24 2.2 23 24

2007 2.1 24 27 2.3 24 25

2008 2.2 27 30 2.4 25 25

a. Determine the holding period return for each stock in each of the preceding 10 years. Find theexpected return for each stock, using the approach specified by Molly.


b. Use the HPRs and expected return calculated in question ‘a’ to find both the standarddeviation and coefficient of variations of the HPRs for each stock over the 5-year period 2004to 2008.

c. Use your findings to evaluate and discuss the return and risk associated with stocks X and Y.Which stock seems preferable? Expain.

d. Ignoring her existing portfolio, what recommendations would you give Molley with regard tostock X and Y?

19. Assume a major investment service has just given Oasis Electronics its highest investment rating,along with a strong buy recommendation. As a result, you decide to take a look for yourself andto place a value on the company's stock. Here's what you find: This year, Oasis paid itsstockholders and annual dividend to $3 a share, but because of its high rate of growth in earnings,its dividends are expected to grow at the rate of 12% a year for the next 4 years and then to levelout at 9% a year. So far, you've learned that the stock has a beta of 1.80, the risk-free rate ofreturn is 6%, and the expected return on the market is 11%. Using the CAPM to find the requiredrate of return, put a value on this stock.


FIN 254: Insurance and Risk Management

Time: 3 Hours Full Marks: 100

Pass Marks: 35

Candidates are required to give their answers in their own words as far as practicable.

Group A

Brief Answer Questions.

Attempt all Questions (2*10)

1. Differentiate between peril and hazard.2. What is risk management?3. How can we identify risk?4. What is premature death?5. Give the meaning of health care insurance.6. Why automobile insurance is essential?7. Give the meaning of a personal umbrella policy.8. Write in short about commercial auto insurance.9. Define the term social insurance.10. Why workers’ compensation insurance is important?

Group B

Descriptive Answer Questions.

Attempt any five questions (5*10)

11. What is insurance? Discuss the benefits and costs of insurance to the society. (5+5)12. Identify the challenges of health insurance in Nepal? Also discuss how they can be met?

(5+5)13. Explain the need and issues of social insurance in Nepal. (5+5)14. Sitara Company began operations this year. The company retains property losses and estimates

that property losses will be Rs100, 000 this year. Property losses are expected to increase at a rateof 30 percent per year for the next two years. Sitara expects to pay for 80 percent of propertylosses in the year the loss occurs, with the other 20 percent paid in the following year. How muchin retained losses will Sitara have to pay this year and each of the next two years?(10)

15. The following information is given to you. (2+5+3)

Possible outcomes for Damages ProbabilityRs0 .50500 .301,000 .105,000 0.0610,000 0.04


a. What is the expected value for damages for the distribution?b. Calculate variance and standard deviation in this distribution. Also write why these are useful

measure of risk?c. Suppose that L is a random variable equal to property losses from a hurricane and that L has the

following probability distribution:Rs 90,000 with probability 0.02Rs 10,000 with a probability 0.06Rs 0 with probability 0.92What is the expected value of hurricane losses i.e. expected loss?

16. Ashmita owns a retail shoe store that is insured for Rs120, 000 under the business income (andextra expense) coverage form. Because of a fire, Ashmita was forced to close the store for threemonths. Based on past and projected future earnings,Ashmita expected to earn a net income ofRs30, 000 during the three month shut down period if the loss had not occurred. During theshutdown period, there were no revenues, and Ashmita had continuing expenses of Rs10, 000.How much will Ashmita recover for the business income loss? Explain your answer.(8+2)

Group C

Analytical Answer Questions

Attempt any two questions (2*15)

17. Why is it essential to regulate in the insurance business? Also discuss the role and functions ofinsurance board in regulating insurance in Nepal. (5+5+5)

18. A. Prasanna purchased a dining room set for Rs5,000and insured the furniture on an actual cashvalue basis. Three years later, the set was destroyed in a fire. At the time of loss, the property haddepreciated in value by 50 percent. The replacement cost of a new dining room set at the time ofloss was Rs 6,000. Ignoring any deductible, how much will Prasanna collect from her insurer?(7)

B. Kumud, age 35, is a single parent and has a one year old son. She earns Rs45, 000 annually asa marketing analyst. Her employer provides group life insurance in the amount of twice theemployee’s salary. Kumud also participates in her employer’s 401(k) plan. She has the followingfinancial needs and objectives. (4+4)

Funeral costs and uninsured medical bills Rs10,000

Income support for her son, Rs2,000 monthly for 17 years Pay off mortgage on home 150,000


Pay off car loan and credit card debts 15,000 College education fund for son 150,000

Kumud has the following financial assets:

Checking account 2,000 IRA account 8,000

401(K) Plan 25,000 Individual life insurance 25,000 Group life insurance 90,000

i. Ignoring the availability of social security survivor benefits, how much additional life insurance,if any, should Kumud purchase to meet her financial goals based on the needs approach?(Assumethat the rate of return earned on the policy proceeds is equal to the rate of inflation).

ii. How much additional life insurance , if any, is needed if estimated social security survivorbenefits in the amount of Rs800 monthly are payable until her son attains age 18?

19. A. Nisa, age 25 is considering the purchase of aRs20, 000 participating ordinary life insurancepolicy. The annual premium is Rs248.60. Projected dividends over the first 20 years are Rs814.The cash value at the end of 20 years is Rs4314. If the premiums are invested at 5 percent interest,they will accumulate to Rs8,631 at the end of 20 years. If the dividends are invested at a 5 percentinterest, they will accumulate to Rs 1,163 at the end of 20 years. ARs1 deposit at the beginning ofeach year at 5 percent interest will accumulate to Rs34.719 at the end of 20 years.(2.5+2.5+2.5)

i. Based on the traditional net cost method, calculate the net cost per Rs1,000 per year.ii. Based on the surrender cost index, calculate the net cost per Rs1, 000 per year.

iii. Based on the net payment cost index, calculate the net cost per Rs1,000 per year.

B. Mention the requirements of an insurance contract. Discuss in brief about life insurancecontractual provisions. (3+4.5)

group 'b' - · pdf filebank guarantee of rs.200,000 issued by nabil bank ltd. to mr....

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