SCHOOL OF ACCOUNTING, FINANCIAL SERVICES & LAW
CURRENTISSUES IN FINANCE
Total exam time: 3 hours 10 minutes
Please read full instructions before commencing writing
fin金融学代考 ‘Is Royal Bank of Scotland’s horrendously damaging acquisition of Dutch rival ABN Amro in 2007 the worst ever M&A deal?
Exam paper information
- Total number of pages: 9
- Number of questions: 8
- Attempt two questions from Section A and two questions from Section B
Special instructions
Dictionaries may only be used during reading time. After reading time, all dictionaries must be placed on the floor for the rest of the exam.
Section A (Attempt any 2 questions) fin金融学代考
Question 1
a) “A main cause of the crisis of 2007–2009 is the various ways through which banks have transferred credit risk in the financial system” (Nijskens and Wagner, 2011).
i.Describe how banks have transferred credit risk through the use of Credit Default Swaps (CDSs).(10 marks)
ii.Critically discuss whether the use of Credit Default Swaps (CDSs) by firms will always reduce firm risk?(10 marks)
b) Explain whether Fung, Wen and Zhang (2012) provide scientific evidence that is consistent with widespread belief that credit derivatives use had encouraged excessive credit risk taking among insurance companies.
(5 marks)
(Total: 25 marks)
Question 2
a) Hedge funds “typically do just the opposite of what their name implies: they speculate” (Edwards, 1999).
i.Describe three essential characteristics of hedge funds that tend to make these funds riskier than other investment funds.(10 marks)
ii.Critically discuss whether some hedge funds have profited from the Greek Debt crisis?(10 marks)
b) Explain whether Mählmann (2013) provides scientific evidence that is consistent with widespread belief that hedge funds have engaged in excessively risky investment activities.
(5 marks)
(Total: 25 marks)
Question 3 fin金融学代考
a) “In the aftermath of the financial crisis of 2008-2009, many believe that executive pay arrangements might have encouraged excessive risk-taking….” (Bebchuk, Cohen and Spamann, 2010).
i.Describe three sources of conflict of interests within the “nexus of contracts”.(10 marks)
ii.Critically discuss the role of executive stock options in mitigating the conflict of interests you have identified in (a) above?(10 marks)
b) Identify and describe five factors that could affect bank risk as documented in Fortin, Goldberg and Roth (2010).
(5 marks)
(Total: 25 marks)
Question 4
a) The recent financial crisis would not have occurred under an Islamic financial system —due to the fact that most, if not all, of the factors that have caused or contributed to the development and spread of the crisis are not allowed under the rules and guidance of Shariah (Kayed and Hassan, 2011).
i.Describe two major prohibitions in Islamic finance and identify a conventional financial product that is not permitted which corresponds to each of the major prohibitions. (10 marks)
ii.Critically discuss to what extent Islamic finance can be differentiated from conventional finance. Please use two Islamic financial products to illustrate the differences and/or similarities to identical conventional financial products? (10 marks)
b) Explain whether Beck, Demirgüç-Kunt and Merrouche (2013) provide scientific evidence that Islamic banks are different from conventional banks.
(5 marks)
(Total: 25 marks)
Section B (Attempt any 2 questions) fin金融学代考
Question 5
The turmoil in the financial markets during 2007 and 2008 has been described as the worst since the U.S.A. Great Depression of 1929 and the 1930s. There was a massive default in mortgage repayments leading to banks being forced to write off several hundred billion dollars of bad loans leading to an acute shortage of credit in the banking system and a dramatic fall in the value of the stock market. A number of factors have been blamed for the crisis including a transformation in the way the banking system operates.
Required:
(a) Describe the traditional system of banking in relation to mortgage lending.(10 marks)
(b) Explain how banks made use of Special Purpose Entities to overcome the Maturity Mismatch and transform the banking system. You should include an explanation of the terms Maturity Mismatch, securitisation and CDO.(10 marks) fin金融学代考
(c) Analyse briefly the findings of Purnanandam (2011) in relation to borrower screening standards.
(5 marks)
(Total 25 marks)
Question 6
Traditional finance and portfolio theory is founded on the concepts of risk and return.
Measures for risk in the theories include standard deviation and beta. Expected
returns can also be measured.
Required:
(a) Discuss briefly each f the following concepts relation to share price returns: fin金融学代考
i.Risk, certainty and uncertainty
ii.Expected Return
iii. Standard deviation and variance
(10 marks)
(b) Critically analyse the Capital Asset Pricing Model for calculating expected returns of assets. You should explain the terms beta, market portfolio and risk free rate in addition to explaining at least two flaws in the model. (10 marks)
(c) Discuss briefly the findings of Aggarwal and Goodell (2011) in relation to international equity risk premia. (5 marks)
(Total: 25 marks)
Question 7
“Since the seminal publication of Modigliani and Miller (1958), corporate finance researchers have devoted considerable effort to investigating capital structure decisions (e.g. Myers, 1977 and 1984). Significant progress has been made in understanding the determinants of corporate capital structure.”
Beattie et al (2006)
Required:
a) Analyse the Traditional Theory and the Modigliani Miller Theory of capital structure (WITHOUT tax) in relation to the weighted average cost of capital and firm value. You should use graphs to illustrate your answer and include any assumptions relevant to the theories. (10 marks)
b) Compare Trade Off Theory and Pecking Order Theory in relation to capital structure giving any reasons explaining these approaches of financing companies. (10 marks)
c) Discuss the findings of Rauh and Sufi (2011) in relation to capital structure and debt structure.
(5 marks)
(Total 25 marks)
Question 8 fin金融学代考
The following is an extract from the Independent newspaper (online edition) regarding mergers and acquisitions:
‘Is Royal Bank of Scotland’s horrendously damaging acquisition of Dutch rival ABN Amro in 2007 the worst ever M&A deal? According to academics, it seems maybe not. Indeed, mergers and acquisitions seldom live up to their promise of delivering strategic benefits, easy growth and a boost in the value of the acquirer’s shares. To be sure, some do work. According to academics, as many as 35 per cent do. But that still means more than 60 per cent of deals fail’.
The Independent (2009)
Required:
(a) Discuss at least four reasons why companies engage in mergers and acquisitions. (10 marks)
(b) Critically evaluate the claim that mergers and acquisitions reduce risk and increase shareholder wealth explaining any examples of concepts and theories which suggest this is not the case. (10 marks)
(c) Briefly discuss the findings of Vallascas and Hargendorff (2010) in relation to mergers and risk of European banks.(5 marks)
(Total 25 marks)
更多代写：Java网课代写 gre在家考作弊 代写作业合法吗 Presentation英国代写 literature review论文代写 简历代写
合作平台：essay代写 论文代写 写手招聘 英国留学生代写
