LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

   B.Com. DEGREE EXAMINATION – COMMERCE

QB 14

FIFTH SEMESTER – November 2008

CO 5402 – FINANCIAL SERVICES

 

 

 

Date : 11-11-08                     Dept. No.                                        Max. : 100 Marks

Time : 1:00 – 4:00

PART –A

ANSWER ALL QUESTIONS                                                                          (10x 2 =20)

1. Who is a merchant banker?
2. What are the responsibilities of a lead manager?
3. Briefly explain the three types of help rendered by Venture Capital Institutions.
4. Write a note on State-level venture capital companies in India.
5. Enlist the various steps involved in factoring transaction.
6. What is forfaiting?
7. State the legal position of lessor and lessee.
8. What is meant by sale and leaseback?
9. Define securitization.
10. List out the securities issued by SPV to the investors.

PART –B

ANSWER ANY FIVE QUESTIONS                                                                               (5 x 8= 40)

 

11. State the role of merchant banker in a public issue?
12. What are the stages involved in venture capital financing?
13. Briefly explain the securitization process followed by financial institutions for creating additional liquidity.
14. Distinguish between financial lease and operating lease.
15. Bring out the merits and de-merits of forfaiting.
16. Discuss the various types of factoring.
17. “Securitisation is yet to gain popularity in India” comment.
18. M/s.Wincare Ltd. has total sales of Rs.160 lakhs and its average collection period is 90 days. The past experience indicates a bad debt loss around 1.5% of credit sales. The company spends Rs.2.50 lakhs on credit administration and collection. M/s.Canfactors Ltd. is willing to pay an advance on receivables at an interest of 18% after withholding a factor reserve of 10%. You are required to compute the cost and benefit of the company and also the effective rate of annual cost of factoring, if the factor is prepared to buy the firm receivables @ 2% commission.

PART –C

ANSWER ANY TWO QUESTIONS                                                                          (2 x 20=40)

 

19. Explain the various functions of merchant banker.
20. What is Scripless trading? Briefly explain the working of a depository system.

 

21. (a) What are the merits of leasing?                                                    (10 marks)

 

• M/s. Motherland Equipment Ltd. can purchase an earthmoving equipment for Rs.12.50 lakhs having a life of 5 years and a residual value of Rs.2.50 lakhs. The company provides depreciation on Straight Line Method. The company’s operating expenses (excluding depreciation and interest) is expected to increase by Rs.3.50 lakhs p.a. and its revenue is expected to raise by Rs.7.50 lakhs p.a. The company’s cost of capital is 10% and its tax rate is 50%. The company has an alternative choice to lease the asset for a yearly rental of Rs.3.25 lakhs p.a. The incremental revenue will be RS.7.50 lakhs p.a. and the expected operating expenses is Rs.3.00 lakhs p.a. Evaluate the proposal. (10 marks)

YEAR	1	2	3	4	5	6	7	8	9	10
PVIF @10%	0.909	0.826	0.751	0.683	0.621	0.564	0.513	0.467	0.424	0.386

 

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