A RT E R E D
B RO K E R
CHARTERED INSTITUTE OF STOCKBROKERS March 2009 Professional Examination Level 2 PAPER 2.1: CORPORATE FINANCE
Tuesday, March 31, 2009 Morning Session Time allowed: 3 hours (9.00 a.m. to 12.00 noon) Additional Material: Answer Booklet
Instructions to candidates
This paper is divided into two sections. Answer five questions in total: In Section A, answer all parts of Question 1. In Section B, answer any four of the six questions. The number of marks is given at the end of each question or part question. The question in Section A carries, in total, 30 marks. The questions in Section B carry, in total, 70 marks.
Follow the instructions on the front cover of the Answer Booklet. Answer your questions in the Answer Booklet provided, additional sheets may be used. At the end of the examination, fasten all your work securely together. All workings should be shown. Where calculations are required using formulae, calculators may be used but steps in the workings must be shown. Calculations with no evidence of this (for example, using the scientific functions of calculators) will receive no credit. Programmable calculators are not permitted in the examination room. Statistical tables and graph paper are available from the invigilator, where applicable.
Professional Examination Level 2 Corporate Finance
SECTION A Answer all parts of this question. Each part question carries 1 mark. Total marks for this question: 30 marks
A bond issue is broken up so that some investors will receive only interest payments while others will receive only principal payments, which is an example of ________ (a) Bundling (b) Credit enhancement (c) Unbundling (d) Financial engineering (e) (c) and (d) The ____________ refers to the potential conflict between management and shareholders due to management's control of pecuniary rewards as well as the...