LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – COMMERCE

TH 17

FIFTH SEMESTER – APRIL 2007

CO 5402 – FINANCIAL SERVICES

 

 

 

Date & Time: 04/05/2007 / 1:00 – 4:00 Dept. No.                                              Max. : 100 Marks

 

 

PART – A

                                                                                                                           (10 x 2 = 20)

Answer ALL questions

 

1. What do you mean by Merchant Banking?

 

2. Write the role of merchant bankers in the issue of prospectus.

 

3. Narrate the term Consortium Finance.

 

4. List out the elements of factoring.

 

5. What is recourse factoring?

 

6. What are the demerits of forfaiting?

 

7. Write a note on “Seed Capital”.

 

8. Define securitisation.

 

9. What is ESOP?

 

10. Give the meaning of financial lease.

 

PART – B

                                                                                                                           (5 x 8 = 40)

Answer any FIVE questions

 

11. How does merchant banking differ from commercial banking?

 

12. Discuss the role of merchant banker in public issue.

 

13. Briefly explain the stages of venture capital.

 

14. What is forfaiting? Differentiate factoring from forfaiting.

 

15. Write a note on lease evaluation from lessor and lessee point of view.

 

16. Bring out the merits and demerits of leasing.

 

17. Explain the process of securitisation.

 

 

 

 

18. The annual turnover of M/s. Welcome Ltd is Rs.6,00,000,  of which  80%  is  credit.

Customers are allowed one month to clear off their dues.  M/s. Royal Factors Ltd.  is

willing to advance  90% of the  bills raised on credit for a fee of  2%  a month  plus a

commission  of  4%  of the total amount of debts. As a result of  this arrangement, the

company is likely to save Rs.2160 annually in management costs and avoid bad debt

at  1%  on credit sales. A  Pune-based  NBFC  which offers  corporate loans has come

forward  to  make  an  advance  equal  to  90%  of the debts at an interest of  18%  p.a.

However, its service charges will be at  3%  on the debts. Would you accept factoring

or the offer of the NBFC ? Comment.

 

PART – C

                                                                                                                           (2 x 20 = 40)

Answer any TWO questions

 

19. Describe the functions of a merchant banker.

 

20. Explain the importance of venture capital financing and bring out the reason for its

slow growth in India.

 

21. M/s. Global Travels Ltd. wishes to acquire an imported car costing Rs.10,00,000. It is

faced with 2 options:

Option I: To acquire it by taking a 15% Bank Loan repayable in 5 equal instalment at

the end each year along with interest.

Option II: To lease the asset  at  a  rental of  Rs.220  per  thousand  of  the asset  value

payable at the end of each year for 5 years.

The tax rate is determined at 50 % and Capital discount rate is estimated at 16%. The

asset  is  expected  to have  a  life of  8 years  with a scrap value of  50% of  the book

value at the end of its life time. The  rate  of  depreciation  is  determined  at  20% on

diminishing balance method. Which option would you recommend? Comment.

 

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