- JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
SUPPLEMENTARY Examinations – APRIL 2013
bbm – iv semester
financial markets and services
Duration: 3 Hrs Max. Marks: 100
Section – A
- Answer all the questions. Each carries 2 marks. (10×2=20)
- What is meant by Forfeiting?
- Mention any 2 reasons for the formation of OTCEI.
- Who is an angel investor?
- Choose the best answer:
- Under forfeiting the client is able to get credit facility to the extent of:
- 100% of the value of the export bill
- 80% of the value of the export bill
- 75% of the value of the export bill
- 90% of the value of the export bill
- Under factoring, the factor acts in the capacity of
- An agent of his client
- A trustee
- A holder for value
- An administrator
- Expand : (a) ONICRA (b) CRISIL
- Write any 2 tax implications to the Lessor in a leasing agreement.
- What is a currency swap?
- Comment in 4 lines as to how savings is the key element for rendering financial service.
- Explain any two fees based financial service.
- What is Private equity?
Section – B
- Answer any FOUR questions out of 6. Each carries 5 marks. (4×5=20)
- How has globalization brought about changes in the financial services industry? Elaborate.
- What are the factors that are analyzed by the venture capitalists while deciding on investments?
- How is hire purchase financing different from lease financing?
- What are the main limitations of credit rating in a country like India?
- Explain Option as a derivative instrument and what are the different types of options?
- Explain the modus-operandi of factoring service.
Section – C
- Answer any THREE questions out of 5. Each carries 15 marks. (3×15=45)
- What do you understand by a stock market index? Why are there so many indices? What purposes do they serve?
- Sriram Polymer Company Ltd. Wants to acquire machinery costing INR 5 million, which has an economic value of 8 years with zero, salvage value. The company is considering two alternatives- taking the machinery on lease or purchasing the asset outright by raising a loan. If the company acquires the asset on lease, it has to pay INR 0.7 million every year as lease rental. The company can borrow INR 5 million at an interest rate of 13% per annum. The loan has to be repaid in 8 equal installments. The company follows straight-line method of depreciation. The corporate tax rate is 35%. Which alternative is better for the company?
- What are the exit routes available to a venture capitalist? What are the pros and cons of each one?
- What is factoring and discuss in detail the different forms of Factoring?
- What are the applications of derivative instruments in risk management? Explain with illustrations.
Section – D
- Compulsory Question – Case study. ( 15 marks)
“Standard & Poor’s said on Thursday India’s budget for the 2013/14 fiscal year would have no impact on the country’s sovereign credit ratings, warning there was potential for the government to exceed its budgeted spending. S&P also said there had been “little progress” in structural reforms to reduce the “vulnerability” in the government’s fiscal position. S&P last year cut its outlook on India’s “BBB-minus” sovereign ratings to “negative,” threatening to push the country into sub-investment category.” (Reuters MUMBAI | Thu Feb 28, 2013 5:36pm IST)
- How should India react to the statement made by S&P
- Can S&P be the ultimate decider of fate for all the Indian companies?
- Does S&P’s rating alter the way India is perceived by foreigners as an investment hub?
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