ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

(Department of Business Administration)

WARNING

1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENT(S) BORROWED OR STOLEN FROM OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN “AIOU PLAGIARISM POLICY”.

Course: Introduction to Business Finance (8414) Semester: Spring, 2025

Level: BBA (4 Years)

Total Marks:100 Pass Marks: 50

ASSIGNMENT No. 1

Q. 1 You have a portfolio with two assets:

• Asset A: Expected return = 12%, Standard deviation = 15%,
  Portfolio weight = 40%
• Asset B: Expected return = 8%, Standard deviation = 10 %,
  Portfolio weight = 60%
• Correlation coefficient between Asset A and Asset B = 0.7
• Make separate calculations if the correlation coefficient is -0.7

Calculate the expected portfolio risk and return. (20)

Q. 2 Define business and explain the various types of businesses with examples.

A firm’s revenue is $500,000, operating expenses are $300,000, and taxes amount to 25% of the net profit. Calculate the net profit and explain its significance. (20)

Q. 3 Discuss the components of the business environment and their impact on financial decision-making. (20)

Q. 4 A loan of $50,000 is amortized over 10 years with an annual interest rate of 8%. Calculate the annual payment using the amortization formula. (20)

Q. 5 Differentiate between the valuation of bonds, preferred stock, and common stock, highlighting the unique factors influencing each.

A bond has a face value of $1,000, a coupon rate of 5%, and matures in 10 years. If the required rate of return is 6%, calculate the bond’s present value. (20)

ASSIGNMENT No. 2

Total Marks: 100 Pass Marks: 50

This assignment is a research-oriented activity. You are required to prepare a detailed report of about 3000 words on the topic allotted to you to be submitted to your teacher for evaluation.

You are required to select one of the following topics according to the last digit of your registration number. For example, if your registration number is 18-IDM-3427183 then you will select topic # 3(the last digit): -

List of Topics:

1. Sustainable Finance: Integrating Environmental, Social, and Governance (ESG) Factors
2. The Rise of FinTech: Disrupting Traditional Business Finance Models
3. COVID-19 and Business Finance: Challenges and Strategies for Recovery
4. Impact Investing: Aligning Financial Goals with Social and Environmental Impact
5. Economic Stimulus Packages: Evaluating Their Effectiveness in Business Finance
6. Digital Transformation in Financial Management: Opportunities and Risks
7. Artificial Intelligence in Financial Decision-Making: Enhancing Efficiency and Accuracy
8. The Role of Central Banks in Shaping Business Finance Policies
9. Inclusive Finance: Bridging the Gap for Small and Medium Enterprises (SMEs)
10. Cryptocurrency and Blockchain Technology: Implications for Business Finance

GUIDELINES FOR ASSIGNMENT # 2:

• 1.5 line spacing
• Use headers and subheads throughout all sections
• Organization of ideas
• Writing skills (spelling, grammar, punctuation)
• Professionalism (readability and general appearance)
• Do more than repeat the text
• Express a point of view and defend it.

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

(Department of Business Administration)

Course: Introduction to Business Finance Course Code: 8414

Level: BBA (4 years) Credit Hours: 03

Unit 1. Business & Finance

1.3 Goals of the Firm

Unit 2. Business & Financial Environment

2.1 Business Environment

2.2 Financial Environment

2.3 Financial Markets

Unit 3. Time Value of Money

3.1 Concepts of Time Value of Money

3.2 Significance of Time Value of Money

3.3 Amortizing Loans

Unit 4. Valuation of Long-Term Securities

4.1 Distinctions among Valuation Concepts

4.2 Bond Valuation

4.3 Preferred Stock Valuation

4.4 Common Stock Valuation

Unit 5: Risk and Return

5.1 Defining Risk and Return

5.2 Using Probability Distributions to Measure Risk

5.3 Attitudes Towards Risk

5.4 Portfolio Theory

Unit 6. Funds Analysis

6.1 Flow of Fund

6.2 Accounting Statement of Cash Flows

6.3 Cash-Flow Forecasting

6.4 Range of Cash-Flow Estimates

6.5 Forecasting Financial Statements

Unit 7. Working Capital Management

7.1 Working Capital: Concept and Classification

7.2 Working Capital Issues

7.3 Financing Current Assets: Short-term and Long-term Mix

7.4 Combining Liability Structure

Unit 8. Capital Budgeting & Estimating Cash Flows

8.1 Capital Budgeting

8.2 Capital Budgeting Process

8.3 Generating Investment Project Proposal

8.4 Estimating Project After-Tax Incremental Operating Cash Flows

Unit 9. Mergers & Other Forms of Corporate Restructuring

9.1 Sources of Value

9.2 Strategic Acquisitions Involving Common Stock

9.3 Acquisitions and Capital Budgeting

9.4 Closing the Deal

9.5 Takeovers, Tender Offers & Defenses

9.6 Strategic Alliances

9.7 Divestiture

9.8 Ownership Restructuring

9.9 Leverage Buyouts

Recommended Book:

Van Horn, C., J. and Jr., W., M., J. (2008). Fundamentals of Financial Management.

13^th Edition. Edinburgh: Pearson Publications Limited.

Additional Books:

Khan, M., Y. and Jains K., P. (2007). Financial Management. New York: McGraw Hills Companies.

Shin, K., J. and Siegel, G., J. (2008). Financial Management. New York: Barrens Business Library.

???