question 1

a)Define the term "Financial Engineering" and explain 3 main components of financial engineering. (8 marks)

Question 2

1) Explain the factors responsible for financial innovations. (12 marks)

Question 3

Calculate, when the price is Sh.32 per share, the theoretical market price per share of the enlarged capital after the issue (the ex-rights price) and also the market value of a right. (8 marks)

c) Issue price to adopt

d) The factors which might invalidate the calculation are as follows:

Question 4

a) Explain the main reasons why multi-national companies (MNC) seek foreign investment.

Question 5

Explain the types of political risks that face multi-national firms in foreign countries.

Question 6

Explain the steps than multi-national firms can take to minimize political risks

Question 7

Calculate the after-tax cash inflows expected from the an-amortized portion of the old bond's issuance cost.

Answer

Question 8

b) Calculate the annual after-tax cash inflows from the issuance of the new bondsassuming the 10-year amortization. (2 marks)

Answer

Question 9

Calculate the after-tax cash outflow from the call premium required to retire the old bonds.

Question 10

Determine the incremental initial cash outlay required to issue the new bonds.(10mks)