LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com DEGREE EXAMINATION – COMMERCE
FIFTH SEMESTER – NOV 2006
CO 5402 – FINANCIAL SERVICES
Date & Time : 09-11-2006/9.00-12.00 Dept. No. Max. : 100 Marks
SECTION – A
Answer ALL questions: ( 10 x 2 = 20 )
- What do you mean by merchant banking?
- What is due diligence certificate?
- What is credit syndication?
- List out the package of factoring.
- What is meant by ESOP?
- What is operating lease?
- Which assets can be securitised?
- Enlist the serious defaults committed by a merchant banker.
- What do you mean by forfaiting?
- List out any four leading factors in India.
SECTION – B
Answer any five questions: ( 5 x 8 = 40 )
- How do you categorise the merchant bankers?
- What are the features of venture capital?
- Explain the process of securitisation.
- What are the merits of leasing?
- Distinguish between factoring and bank financing.
- Discuss the working of Depository system.
- How is accounting done for financial lease with respect to Lessor?
- The turnover of R Ltd. is Rs.60 lakhs of which 80% is on credit. Debtors are
allowed one month to clear off the dues. A factor is willing to advance 90% of
the bills raised on credit for a fee of 2% a month plus a commission of 4% on the
total amount of debts. R Ltd. as a result of the arrangement is likely to save
Rs.21,600 annually in management costs and avoid bad debts at 1% on the credit
A scheduled bank has come forward to make an advance equal to 90% of the
debts at an interest rate of 18% p.a. However its processing fee will be at 2% on
the debts. Would you accept factoring or the offer from the bank?
SECTION – C
Answer any TWO questions: ( 2 x 20 = 40 )
- Explain the functions of Merchant Banker?
- (a) What are the stages of venture capital financing?
- What are the criteria to be considered while analyzing venture capital proposal?
- N Ltd. plans to acquire a computer. It can be either leased or acquired outright by
borrowing at 12% interest payable at the end of each year. Principal is due for
repayment after 10 years. Other data are as follows:
Purchase of computer: Cost – Rs.40 lakhs; Annual maintenance – Rs.50,000
(to be paid in advance every year); Life of the computer – 10 years; Depreciation – 15% p.a.
on WDV; Salvage value – Rs.4 lakhs.
Leasing of computer: Initial lease payment – Rs.4 lakhs; Lease rent – Rs.7
lakhs (payable in advance each year for 10 years); Lease rent – Rs. 7 lakhs (payable in
advance each year for 10 years).
Assuming no tax, should the company buy or lease the computer?
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