Financial Markets and Services

St. Joseph’s College of Commerce B.Com. 2013 IV Sem Financial Markets And Services Question Paper PDF Download

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  1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

SUPPLEMENTARY EXAMINATION –   APRIL 2013

 B.COM. – IV SEMESTER

FINANCIAL MARKETS AND SERVICES

TIME: 3 HRS                                                                                                MARKS : 100

SECTION – A

  1. Answer ALL the questions.                          (10 x 2 = 20)
  2. “Financial system provides the intermediation between savers and investors and promotes faster economic development”. Substantiate.
  3. The RBI has taken several steps to bring ————– sector of financing under its control but did not succeed. Explain giving two examples of this sector.
  4. How does a Money Market differ from a Capital Market? Give four points.
  5. Explain the method of Primary Issue which helps the issuing company to discover volume and price of the issue.
  6. Write a note on NSDL.
  7. What is a derivative instrument? Explain the derivative contract that is tailor made and not standardised.
  8. Explain two innovative fees based financial services.
  9. ————— is a short term credit facility that is always extended with recourse. Explain the process.
  10. What is leveraged lease?
  11. “Stock markets render invaluable services to the investors, companies and to the economy as a whole.”  explain in four points.

SECTION – B

  1. Answer any FOUR                                            (4 x 5 = 20)
  2. What is the significance of Listing? Explain briefly the steps to be followed for the same.

 

  1. Write short notes on:
  2. Deep discount Bonds
  3. Commercial Papers

 

  1. What are the differences between financial lease and operating lease?

 

  1. What are the scope and limitation of a Merchant banker?

 

  1. Briefly discuss the procedure to be followed and the method of trading in a stock exchange as a speculator/investor.
  2. Observe the following picture. Explain the funding method which can help the manager.

 

 

 

SECTION – C

  • Answer any THREE Each carries 15 marks.                 (3 x 15 = 45)
  1. “A firm may propose to acquire a certain asset either with equity funds or with a financial lease.”
  2. What are the factors influencing buy/lease decisions?
  3. Explain the procedure followed to evaluate a lease.

 

  1. What is the significance of Venture Capital financing? Explain the stages of Venture Capital Financing.

 

  1. How does SEBI protect the interest of Investors? Explain with reference to its Functions & Powers.

 

  1. Discuss briefly:
  2. Lame Ducks
  3. S&P CNX 100
  • NASDAQ
  1. Open-ended Funds
  2. Forfeiting

P.T.O……..

 

 

  1. Discuss in detail about the method of investing depicted in the picture.

 

SECTION – D

  1. Compulsory Question                                 (1 x 15 = 15)
  1. An investor has invested in NCDs of Tata Chemicals, Eid Party ltd., Bharti Tele-Venture & United Western Bank in the ratio of 4:3:2:1.

Credit rating agency ICRA has reaffirmed the LAA + rating assigned to the Rs.125 crore non-convertible debentures of Tata Chemicals to AA/ stable.

Eid parry India ltd., has informed BSE that CRISIL has upgraded the rating for the non convertible debenture to AA/stable from AA-/stable.

Credit rating agency has upgraded the rating of Rs.100 crore non convertible debentures of Bharati Tele-Venture from ‘LAA’ to ‘LAA+’ indicating high credit quality.

CARE has placed B+ rating of United Western Bank NCDs under ‘credit watch’.

Questions:

  1. Advice the investor with regard to revision of the portfolio. Discuss with reference to the significance of the rating symbols.               (8 marks)
  2. Explain the Credit Rating Process.  (7 marks)

 

St. Joseph’s College of Commerce B.B.M. 2013 IV Sem Financial Markets And Services Question Paper PDF Download

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  1. 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

 

  1. 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:
  1. Under forfeiting the client is able to get credit facility to the extent of:
  2. 100% of the value of the export bill
  3. 80% of the value of the export bill
  4. 75% of the value of the export bill
  5. 90% of the value of the export bill
  6. Under factoring, the factor acts in the capacity of
  7. An agent of his client
  8. A trustee
  9. A holder for value
  10. 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

 

  1. 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

 

  1. 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)

  1. How should India react to the statement made by S&P
  2. Can S&P be the ultimate decider of fate for all the Indian companies?
  3. Does S&P’s rating alter the way India is perceived by foreigners as an investment hub?

 

 

 

St. Joseph’s College of Commerce 2014 IV Sem Financial Markets And Services Question Paper PDF Download

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  1. JOSEPH COLLEGE OF COMMERCE (Autonomous)

END SEMESTER EXAMINATION – MARCH/APRIL 2014

B.Com (TRAVEL & Tourism) – IV Semester

FINANCIAL MARKETS AND SERVICES

Duration: 3 Hours                                                                                       Max. Marks: 100

 

Section – A

  1. Answer all the questions. Each carries two marks:                               (10×2 =20)

 

  1. List out the components of money market.
  2. What do you mean by pre-emptive shares?
  3. Write a short note on stock indices.
  4. What is loan syndication?
  5. Distinguish between “With recourse factoring “and “Without recourse factoring”.
  6. Mention any two features of venture capital.
  7. State the classification of shares by BSE.
  8. What do you understand by the term Export factoring?
  9. Write a short note on CRISIL.
  10. State any two differences between financial lease and operating lease.

 

Section – B

 

  1. Answer any four Each carries 5 marks.                                        (4 x 5 =20)

 

  1. Discuss the various kinds of financial derivatives and bring out their features briefly?
  2. Explain Tripartite Leasing & Sale and Lease Back.
  3. Ram has recently got promoted as assistant manager and he has received Rs.5,00,000 as bonus. As you are his financial consultant, you are expected to suggest few financial instruments where Mr.Ram can invest in? Mention any five innovative financial instruments?
  4. Explain the importance of Venture leasing?
  5. What is Forfaiting? Explain the mechanism of forfaiting with the help of a diagram?
  6. Briefly explain the benefits of credit rating?

 

Section – C

 

  • Answer any three   Each carries 15 marks:.                     (3 x 15 = 45)

 

  1. Write short notes on the following:
  2. SEBI b. BSE               c. OTCEI

 

  1. Explain different types of credit rating and the steps involved in credit rating process?

 

  1. Define financial service industry and discuss the various services rendered by it?

 

  1. You are a successful entrepreneur and you had been called by Mr.Rahul, Assistant professor of St. Joseph’s college of commerce to give a guest lecture to 2 TT students to inspire them to be a successful entrepreneurs. You are asked to share your experience of approaching a venture capitalist and various stages involved in venture capital financing?

 

  1. Explain the different types of factoring and their significance?

 

Section – D

 

  1. Compulsory question – Case study                                        (1 x 15 = 15)

           22.

Mr. Rajesh, who is 34 years old had worked for IT industry for 6 years and had saved Rs.15 lakhs. In 2008 he invested all his savings and started up a small garment manufacturing business with 20 employees. In the initial few years he was not able to make profits because most of his business transactions were on credit basis and 40% of his debtors turned out to be defaulters, to overcome the working capital crunchhe decided to sell their trade debts to a financing company that provide factoring service.

In 2012 he made profits of Rs.50 lakhs per year with the efforts of efficient employees and eminent fashion designers. At the end of 2012 he decided to take his business to the next level by exporting his garments to other countries. He realised the need for big production place and high technological equipment’s in the manufacturing process. He listed down the important requirements in the expansion of his business i.e. land, building and high technology equipment’s.

Now he is in a dilemma whether to purchase the land and then build the factory or to directly lease the building and equipment’s as he is not sure about the success of his new venture.

In this situation he approaches a merchant banker who could  explain him better the various factors that influence buying and leasing decision.

 

Questions:

  1. You being a merchant banker who provides consultancy service, you are expected to suggest Mr. Ramesh by explaining the factors those influencing lease vs buying decisions.
  2. If you suggest Mr. Ramesh to lease the equipments and the building, explain the type of lease that you would suggest? Or defend your suggestion of purchasing the assets with strong reasons?

(5+10)

 

 

 

St. Joseph’s College of Commerce B.B.M. 2014 IV Sem Financial Markets And Services Question Paper PDF Download

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  1. JOSEPH COLLEGE OF COMMERCE (Autonomous)

END SEMESTER EXAMINATION – MARCH/APRIL 2014

BBM – IV Semester

FINANCIAL MARKETS AND SERVICES

Duration: 3 Hours                                                                                       Max. Marks: 100

SECTION – A

  1. I) Answer ALL the Each carries 2 marks.                    (10 x 2 = 20)

 

  1. Well developed financial markets consisting of both deep and liquid markets are essential for a balanced financial system.
  2. Write any four differences between Discounting and Factoring.
  3. Explain four functions of a Stock Exchange.
  4. Merchant Banking, although non-banking financial activity, resembles banking function.
  5. Mention four differences between Futures and Options.
  6. What is NASDAQ?
  7. Write a note on CRISIL.
  8. How does a financial institution help a business to manage its accounts receivables?
  9. Mention four Regulatory Functions of SEBI.
  10. i) After the collapse of Satyam it was taken over by ——————–.
  11. ii) —————- has bought messaging app in a deal worth a total of $19bn (£11.4bn) in cash and shares.

SECTION – B

  1. II) Answer any FOUR Each carries 5 marks.                             (4 x 5 = 20)
  2. What are the differences between an Operating Lease and Financial Lease?
  3. Write a brief note on five kinds of Option Contracts.
  4. Mention five advantages and disadvantages of Listing of Shares.
  5. What are Financial Services? Explain its Features.  Give two examples.
  6. What financial service does the following pie-chart represent? Write a note about the same.

 

  1. Explain the features of Factoring.

 

SECTION – C

III) Answer any THREE questions.  Each carries 15 marks.                      (3 x 15 = 45)

  1. Explain any TEN functions of Merchant Banking.
  2. Write a brief note on the following:
    1. Private Placements
    2. Any three Kinds of Risks associated with Derivatives
  • Tripartite Lease
  1. Moody’s and S&P
  2. Certificate of Deposits and Commercial Papers

 

  1. Briefly discuss the various stages in Venture Capital Financing.
  2. What are the objectives of Credit Rating? Explain also the procedure for Credit Rating.
  3. Write about any five capital market instruments.

 

SECTION – D

  1. IV) Compulsory question.    (15 marks)
  1. Credit rating started in USA in the late 19th century when early rating agencies began publishing financial analyses on railroad companies. The concept came to India in 1987 with the setting up of CRISIL.  But the turn of the 21st century brought a slew of problems for the credit rating agencies (CRAs) as they failed to detect signals of the collapse of companies like Enron Corp., King Fisher Airlines, and so on. The credit worthiness of the rating agencies and validity of the processes and methodologies adopted for rating began to be questioned and demands for strengthening regulations began to be made. The government began to pressurise SEBI to re-examine the role of credit rating agencies and proposed greater oversight of the rating firms’ anticompetitive practices and conflicts of interest. A few critics also proposed establishing a separate regulatory set-up to monitor the rating agencies. The major question revolved around the extent of regulatory involvement in ensuring the safety and soundness of the rating process. Experts felt that these regulations would change the very nature of the rating industry in the India.

Questions:

  1. What are the objectives of CreditRating?
  2. Discuss the credibility of credit rating agencies.
  • What can be the solution, in your opinion, to the above mentioned setback?

 

 

St. Joseph’s College of Commerce IV Sem Financial Markets And Services Question Paper PDF Download

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ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – MARCH/APRIL 2015
BBM – IV Semester
M1 11 402: FINANCIAL MARKETS AND SERVICES
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                                        (10×2=20)
  1. What do you mean by Derivatives?
  2. Distinguish between ‘with recourse factoring’ and ‘without recourse factoring’.
  3. Write a brief note about the organization structure of mutual funds.
  4. State any two features of venture capital.
  5. What is the difference between a jobber and a broker?
  6. List out the various types of credit rating?
  7. 1.      What do you understand by the term Export factoring?
  8. Mention any two objectives of SEBI.
  9. What is the difference between Open repurchase agreement and Term repurchase agreement?
  10. Write any two advantages of financial lease.
 

SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                                      (4×5=20)
  11. What is mutual fund? Explain the various risks associated with mutual fund.
  12. Distinguish between new issue market and Secondary market.
  13. Briefly explain the benefits of rating financial instruments to both investors and to the issuers.
  14. What do you mean by Fee based financial services? Explain any five fee based services.
  15. Explain the various stages of Venture Capital financing.
  16. Write a brief note on any two stock indices.
 

SECTION – C
III) Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)                                                                                                
  17. What do you mean by financial markets? Explain in detail any seven long term and short term financial instruments that are available in the financial markets for investments.
  18. Mr. Ashok had started a small scale business in the year 2013; a lot of his working capital is tied up in the form of trade debts because of credit sales. In this situation Mr. Ashok approaches a financial service provider to help him to overcome his working capital crisis.

What is the financial service provided?  Explain its types.

 

 
  19. a. Explain the process involved in credit rating a particular debt instrument of a company by a credit rating agency.

b. Write a short note on the following credit rating agencies

i)  CRISIL

ii) ICRA
  20. What is venture capital? Explain the various methods adopted by the venture capitalists to fund the entrepreneur’s projects and the exit routes to quit the business.
  21. Define leasing. Explain the different types of leasing.
SECTION – D
IV) Case Study                                                                                                              (1×15=15)                                                                                          
  22. Carson Company is a large manufacturing firm in California that was created 20 years ago by the Carson family. It was initially financed with an equity investment by the Carson family and ten other individuals. Over time, Carson Company has obtained substantial loans from finance companies and commercial banks. The interest rate on the loans is tied to market interest rates and is adjusted every six months. Thus, Carson’s cost of obtaining funds is sensitive to interest rate movements. It has a credit line with the bank in case it suddenly needs to obtain funds for a temporary period. It has purchased Treasury securities that it could sell if it experiences any liquidity problems.

Carson Company has assets valued at about 50 million dollars and generates sales of about 100 million per year. Sum of its growth is attributed to its acquisitions of other firms. Because of its expectation of strong U.S.  economy, Carson plans to grow in the future by expanding its business and through acquisitions. It expects that it will need substantial long term financing and plans to borrow additional funds either through loans or by issuing bonds. It is also considering the issuance of stock to raise funds in the next year. Carson closely monitors conditions in financial market that could affect its cash inflows and cash outflows and therefore affects its value.

 

Answer the following questions:

a.      How might finance companies facilitate Carson’s expansion?  (5 marks)

b.      How might Carson use the primary market and secondary market to facilitate its expansion?                                                                  (3 marks)

c.       Should Carson consider a private placement of bonds? What types of investors might be interested in participating in a private placement?

Do you think Carson could offer the same yield on a private placement as it could on a public placement? Explain.                                (7 marks)

 

 

 

 

 

St. Joseph’s College of Commerce IV Sem Financial Markets And Services Question Paper PDF Download

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  1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – MARCH/APRIL 2015

B.COM. – IV SEMESTER

C1 11 404: FINANCIAL MARKETS AND SERVICES

Duration: 3 HRS                                                                                         Max. Marks : 100

SECTION – A

 

  1. Answer ALL the questions. (10 x 2 = 20)

 

  1. What is a financial lease?
  2. List out the two major functions of the Financial System.
  3. Explain the risk associated with Mutual Funds.
  4. Write a short note on CARE.
  5. What is the  risk associated with uncertainties in trade laws, administered prices and policy changes?
  6. Elaborate on the process of issuing indirect equity in the international market by Indian companies?
  7. Draw a brief note on agreement where in the borrower parts with securities to the lender to repurchase them at a specific rate and time.
  8. What is insider trading?
  9. Discuss the correctness or otherwise of the following statement-

LIC and UTI can act as lenders and borrowers in the call money market.

  1. Elaborate on the role of SEBI as a capital market regulator.

 

SECTION – B

  1. Answer any FOUR                        (4 x 5 = 20)

 

  1. What is leasing?  When is it resorted to?  Discuss the disadvantages inherent in entering into a lease?
  2. List out the differences between New Issue Market and Stock Market.
  3. Bring out the role of merchant bankers in issue management.
  4. Explain any four methods of Factoring.
  5.  Write a short note on :
  1. Jobbers
  2. Demand and usance bills.
  1. Identify the financial service from the below given picture and explain its merits to individuals.

 

 

SECTION – C

  • Answer any THREE Each carries 15 marks.                (3 x 15 = 45)

 

  1. Explain the functions of the merchant bankers.
  2. Write short notes on the following:
  1. Buy back of shares.
  2. Foreign Institutional Investors.
  3. Venture Capital.
  4. Commercial Papers.
  5. OTCEI

 

  1. “The  money market is an integral part of a country’s economy and a developed money market  is highly indispensable for rapid economic development” –in this context explain the characteristic features of a developed money market and its importance.

 

  1. Critically evaluate depository system and also list out the depositories in India.
  2. Explain the various types of Mutual Funds.

 

SECTION – D

  1. Case study                                                                     (1 x 15 = 15)

Five Star is a premier chocolate manufacturing concern, incorporated in India. It has registered stellar performances in  sales and growing market size, over a decade of its existence. Its major revenues are from the Foreign markets, with Indian markets contributing towards  a little less than half of its revenues. Its raw materials were sourced from around the world. The capital structure was ideal, but during the last few years

 

 

 

 

Five star has been wanting to expand its operations.  It is in need of financial resources both for making capital investments and for working capital purposes.  The company has been deliberating on several sources of raising capital for this expansion.  The directors of the Five Star are in favour of Initial Public Offerings (IPOs)

 

Questions:

  1. Explain IPOs in the context of raising capital for a company.
  2. Mention a few other ways of raising capital from the capital markets by firms.
  3. In the light of the above case if the shares of Five Star are to be listed in a recognised stock exchange, what would be the procedure for listing.

 

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in order to expand, there was capital expansion taking place. Its shares were listed on the Bombay Stock Exchange and was traded at around Rs.500-Rs.550.

Then suddenly the Foreign markets started shrinking and there was heavy pressure on the bottom line. This had a great impact on the share prices. Though such phenomenon is temporary with the companies, and they will have their ability to turn over quickly, and the market prices felt to around Rs.150-Rs.200.

 

  1. Explain the disadvantages of listing. (5 marks)
  2. List out the procedure for listing. (10 marks)

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ANSWER SCHEME

FINANCIAL MARKETS AND SERVICES

 

SECTION – A

  1. Answer ALL the questions. (10 x 2 = 20)
  1. What is a financial lease?

Financial lease is a lease to finance equipments which have high value and cost is on the higher side.

  1. List out the two major functions of the Financial System.

The functions of Financial system are Mobilisation of savings and making it available for capital formation.

  1. Explain Funds of Funds Mutual Funds.

Funds of Funds Mutual Funds are those which invest their corpus in funds of other mutual funds.

  1. Uncertainties in trade laws, administered prices and policy changes are ______________ risks.

Ans. Political risks.

  1. Credit Analysis and Research in Equities is a ______________ firm.

Ans: Credit Rating Firm

  1. The process of issuing indirect equity in the international market by Indian companies is called _________________.

Ans: GDR’s

  1. The borrower parts with securities to the lender with an agreement to repurchase them at a specific rate and time is _________________

Ans:Repos

  1. What is  insider trading?

Insider trading is communication of price sensitive information to any person  outside the company to have a major impact on the price and the volume of shares traded of that company.

  1. LIC and UTI can act as lenders and borrowers in the call money market –True/False.

Ans: False.

  1. Name the authority preceding to the Companies Act.

Ans: Controller of Capital Issues.

 

SECTION – B

Answer any FOUR questions.                                                                (4 x 5 = 20)

  1. Explain the disadvantages of leasing.

The Disadvantages of leasing are

  1. Not suitable for project finance.
  2. Certain tax benefits and subsidy may not be available.
  3. Cost of financing higher than debt financing.
  4. Lessee is not entitled for any protection in case the supplier commits breach of warranties.

 

  1. List out the differences between New Issue Market and Stock Market.

Ans: New issue market deals with new securities which are issued for the first time  for public subscription, while SE provides a ready market for buying and selling of old securities.

The stock exchanges have physical existence and are located in particular geographical area. New Issue does not have physical presence.

New issue market provides the issuing company with funds for starting, expansion or diversification. SE provides indirect capital as it provides marketability to the shares.

  1. Bring out the role of merchant bankers in issue management.

Ans: Descriptive in detail the various aspects of issue management and the role of merchant banker.

 

  1. Explain any four methods of Factoring.

Ans: Explain any with recourse, without recourse, selling based, buyer based, Export based, off-shore factoring

  1.  Write a short note on :
  1. Jobbers: are speculators, an independent broker who deals in securities on his behalf. He purchases and securities in his own name. His main job is to earn a margin of profit due to price variation of securities. He plays inthe market for quick returns.
  2. Demand and usance bills: Demand bills on paid on the demand of the drawer. It is called sight bills. It can D/P or D/A.

Usance bills are bills paid after a duration of the time mentioned there in.

 

  1. Identify the financial service from the below given picture and explain its merits to individual investors.

Ans: Credit Rating.

Merits: Low cost of information, quick investment Decision, Independent Investment Decisions, Investor Protection,

 

 

SECTION – C

  1. Answer any THREE questions.  Each carries 15 marks.           (3 x 15 = 45)
  2. Explain the functions of the merchant bankers.

Ans: broad range of merchant bankers functions from corporate counselling, project counselling, issue management, loan syndication, portfolio management, NRI services and other functions to be discussed.

  1. Write short notes on the following:
  • Buy back of shares: Buy back is a method of cancellation of share capital. It leads to reduction in the share capital of a company as opposed to issue of shares which results in an increase in share capital.
  1. Foreign Institutional Investors: Foreign Institutional Investors are mutual funds, retirement pension funds, who have huge corpus for investment in foreign markets. FII’s have been allowed to invest in all securities trade in primary and secondary markets. The holding of a single FII in a company will not exceed the ceiling of 5% of the equity capital of a company.
  2. Venture Capital: Venture capital is the investment in new and untried enterprises that are lacking a stable record of growth. Venture capital refers to the commitment of capital as shareholding for the formulation and setting up of small firms specialising in new ideas or new technologies. It injects funds and also input of skill needed to set up the firm, design its marketing strategy and organise and manage it.
  3. Commercial Papers: it a money market instrument issued by the highly rated corporate to help them raise their working capital requirements.
  4. OTCEI- It is a ringless and computerised exchange. This is a specially created to trade on securities of small and medium companies
  1. “The  money market is an integral part of a country’s economy and a developed money market  is highly indispensable for rapid economic development” –in this context explain the characteristic features of a developed money market and its importance.

The characteristic features of developed money market are:

  • Highly organised banking system.
  • Presence of a Central Bank
  • Availability of Proper Credit Instruments.
  • Existence of sub-markets
  • Ample resources
  • Existence of secondary market.
  • Contact with other foreign money markets etc.,
  1. Critically evaluate depository system and also list out the depositories in India.

 

  1. Identify the process from the given diagram. Explain its importance in the economic development.

Ans: It is securitiazation.

Importance of securitization

  1. Additional source of Fund
  2. Greater Profitability
  3. Enhancement of Capital Adequacy Ratios
  4. Spreading of Credit risk
  5. Low cost of Funding
  6. Higher rate of return
  7. Prevention of Idle Capital

 

 

St. Joseph’s College of Commerce Financial Markets And Services Question Paper PDF Download

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St. Joseph’s College of Commerce (Autonomous) 
End Semester Examination – March /April 2016
B.COM (T.T) –IV SEMESTER
C2 12 404: FINANCIAL MARKETS AND SERVICES
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                                        (10×2=20)
  1. What is capital market?
  2. Explain CRISIL.
  3. Explain DFHI.
  4. What do you mean by public issue?
  5. Who is a jobber?
  6. Define Depositary participants.
  7. What is market making?
  8. Mention any four stages of venture financing in India.
  9. Distinguish between ‘with recourse factoring’ and without recourse factoring’.
  10. What is Vendor lease?
SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                                      (4×5=20)
  11. Explain in detail the stock lending mechanism.
  12. Briefly explain the different types of factoring and their significances.
  13. What are the functions of Credit rating?
  14. List down the contents of lease agreement.
  15. Project the present scenario of financial services.
  16. Explain the guidelines for venture capital in India.
 

SECTION – C
III) Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)                                                                                                
  17. What are the major challenges facing the financial service sector in India.
  18. Draw and explain the structure of Indian Financial system of India.
  19. Discuss briefly some of the innovative financial instruments introduced in recent times in the financial service sector.
  20. What are the principles steps involved in private placement. Explain in detail.
  21. Explain the structure of Indian Money market.
 

SECTION – D
IV) Case Study – Compulsory question.                                                                (1×15=15)                                                                                           
  22. Global Crisis and Its Impact on Indian Financial service sector

The crisis which originated in the United States (US) housing mortgage market in 2007 transformed into a full-fledged global financial crisis, considered to be the worst ever since the Great Depression. The financial landscape changed drastically with the collapse of Lehman Brothers in 2008. Irrespective of the degree of globalization of a country and soundness of economic fundamentals, the crisis spread across the world in varying degrees of penetration. The international transmission of liquidity shocks was fast and unprecedented. The falling asset prices and valuation uncertainty affected market liquidity, the failure of leading global institutions and the deleveraging process tightened the market for funding liquidity. While the global financial markets have started showing signs of stabilization, credit flow in the advanced markets is yet to recover. Despite the decoupling theory, the emerging economies too faced problems and were affected during the crisis. Decoupling theory basically states that when the growth of the developed economies goes downwards, the emerging economies would remain unaffected due to their foreign exchange reserves, corporate balance sheets and the banking system. In the peak of the global economic crisis however, the decoupling theory did not make sense as emerging economies, including India, faced capital flow reversals, sharp widening of spreads on sovereign and corporate debt and abrupt currency depreciations. Even though the Indian banking system had no direct exposure to the subprime crisis and had very limited off balance sheet activities and securitized assets, limited dependence on external demand as exports account for less than 15 % of the GDP and growth is predominantly driven by domestic consumption and investment, the financial crisis did affect the Indian economy. The seemingly 9 % GDP growth rate fell down to 6 %. This was primarily because of India’s integration into the world economy, India’s two-way trade (merchandise exports plus imports), as a proportion of GDP grew from 21.2% in 1997-98, the year of the Asian crisis, to 34.7 % in 2007- 08 and the increase in the Indian corporates’ access to external funding. In the five year period from 2003 to 2008, the share of investment in India’s GDP rose by 11 percentage points. Corporate savings financed roughly half of this, but a significant portion of the balance financing came from external sources. While funds were available domestically, they were expensive relative to foreign funding. On the other hand, in a global market awash with liquidity and on the promise of India’s growth potential, foreign investors were willing to take risks, and provide funds at a lower cost. In 2007 – 08, India received capital inflows amounting to over 9 % of GDP as against a current account deficit in the balance of payments of just 1.5 % of GDP. These capital flows, in excess of the current account deficit, prove the importance of external financing and the depth of India’s financial integration.

 

  1. How did global crisis affected our Indian Financial service sector?
  2. What are the challenges faced by the sector?
  3. How did India manage the crisis?

 

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St. Joseph’s College of Commerce IV Sem Financial Markets And Services Question Paper PDF Download

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ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – MARCH/APRIL 2016
B.COM –IV SEMESTER
C1 11 404: FINANCIAL MARKETS AND SERVICES
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                                        (10×2=20)
1. Name the institution which plays the role of a promotor, corporate advisor, financial expert, manager to the issue, underwriter and portfolio manager.
2. In mutual funds, what is the responsibility of the Asset Management Company?
3. What are Gilt funds?
4. What is a wet lease and a dry lease?
5. What is the name of the commercial arrangement whereby an equipment user has the right to use the equipment in return for a rental?
6. What is factoring without recourse?
7. What is Bridge Financing?
8. Outline the definition of a venture capital company.
9. Name the components of the capital market.
10. Name four non-fund or fee based financial services.
SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                                      (4×5=20)
11. Explain four ‘terms’ used in leasing and the steps involved in entering into a leasing transaction.
12. “Factoring helps to free up working capital tied up in the form of trade debts”.  Explain.
13. Explain in brief any two venture capital funding organizations in India.
14. Write a short note on

(a)   Pure growth mutual funds.

(b)   Off shore mutual funds.
15. Distinguish between Banking and Merchant Banking services.
16. Explain the relationship between the primary and secondary market and the differences between the two.
SECTION – C
III) Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)                                                                                                
17. “A financial system is a set of sub systems consisting of financial institutions, markets, instruments and services”.  Give an overview of the components of the Indian financial system.
18. Explain in detail any five money market instruments and their importance.
19. “A merchant banker acts as a Financial Engineer for a business”.  In this context explain the functions of Merchant Banks.

 
20. “Credit rating benefits both the Investors and the company which is rated”.  Explain.
21. Different leasing options exist according to the need of the customer. Explain.
 

SECTION – D
IV) Case Study – Compulsory question.                                                                (1×15=15)                                                                                          
22. The 1991-92 Securities Scam (Harshad Mehta Scam)

In 1991, major changes in the government policy led to the emergence of a market-oriented private enterprise economy through the removal of controls.

The economic liberalisation package compelled banks to improve their profitability. With liberalisation entered the free interest rate regime, which meant that banks had to face interest rate uncertainty. Coupled with this was strict enforcement of SLR requirements for banks to keep the money supply under control. Hence, public sector banks were forced to undertake more trading in government securities. The increase in interest rates on government securities with a longer period of maturity meant capital loss (depreciation) on the holding of old securities. To partly offset this loss, banks began trading of a new instrument—repos or ready forward. Repo is a means of funding by selling a security held on spot (ready) basis and repurchasing it on forward basis.

 

Several banks, including foreign banks, were unwilling to purchase securities for maintaining SLR because of the risk of depreciation. They preferred ready forward contracts with other banks, which were surplus in securities. These ready forward contracts were turned around every fortnight depending on the banks’ deposit figures. Moreover, many banks had purchased public sector bonds which they could not sell due to the coupon rate hike. Many banks then violated the Reserve Bank advice and entered into ready forward deals in PSU bonds.

 

Repos are a legal and versatile instrument but the inter-bank repos in 1991-92 were based on some inside information obtained illegally. Besides obtaining information illegally, most of the ready forward deals were dubious and facilities like Bank Receipts (BRs) and SGL forms were misused. Bank receipts which were working smoothly as a mechanism (acknowledgement) for transfer of government securities amongst banks were highly misused. There were fake bank receipts in circulation and there was double counting of BRs, which led to an accelerated growth in money supply.

 

Most banks, with a view to increasing their profits, employed their clients’ funds in stocks through their brokers. This they did by offering higher returns through portfolio management.

 

 

The stock market index—BSE Sensex—rose by leaps and bounds. Harshad Mehta, by injecting the banks’ money into share trading, pushed up prices of selected scrips. Besides the banks’ funds, he tapped another source of money—mutual funds. The government was encouraging the creation of mutual funds. These mutual funds, in order to increase their popularity, assured higher returns which led to sizable flow of money to the stock market. Moreover, certain industrialists engaged themselves in ‘insider trading’ to raise the prices of their shares to prevent hostile takeovers.  Brokers, with so much money in their hands, were successful in raising the Sensex by 1,500 points in 15 days.

 

The boom, which began in July 1991, peaked in April 1992, before the bubble burst. Prices of many scrips such as Apollo Tyres, ACC, Castrol India, East India Hotels, GE Shipping, GNFC, Deepak Fertilisers, and Tata Chemicals shot up three times their usual value in just a year’s time.

 

Between March 1991 and March 1992, the BSE sensitive index rose by more than three and a half times—from 1,168 to 4,285. At the peak level, the market capitalisation of Rs 3 lakh crore was about half of the GDP as compared to hardly one-fifth of the GDP the previous year. The market price-earning (P/E) ratio at 55 was not only higher than what it was in many other developing and developed countries but was far in excess of the fundamentals. The monetary size of the securities fraud was estimated to be Rs 3,542 crore. The Sensex dropped to 3,000 and the BSE was closed for a month when the scam came to light.

 

The scam highlighted the loopholes in the financial system, unfair trade practices in various instruments, widespread corruption, and wrong policies. The Reserve Bank banned inter-bank repos after the scam and the pace of reforms in the financial sector also increased.

 

Questions:

 

a.      Highlight atleast four loopholes in the Indian Financial System during the early 1990’s.

b.      Give a brief account of the unfair trade practice carried out by Harshad Mehta.

c.       Give your recommendations to avoid such a situation in the future.

 

(5+5+5)

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St. Joseph’s College of Commerce B.B.A. 2016 Iv Sem Financial Markets And Services Question Paper PDF Download

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REG NO:

ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESER EXAMINATION – MARCH/APRIL 2016
BBM – IV Semester
m1 11 402: FINANCIAL MARKETS AND SERVICES
Duration: 3 Hours                                                                                            Max.  Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                                        (10×2=20)
  1. What is meant by new issues market?
  2. What is meant by financial intermediation?
  3. What is mutual fund?
  4. What is SEBI?
  5. Briefly explain the terms ‘IPO’ and ‘ NFO’.
  6. What is BOLT?
  7. Write short notes on NASDAQ.
  8. What is NIFTY?
  9. Write short note on CRISIL.
  10. What is loan syndication?
 

SECTION – B

 
II) Answer any FOUR questions.  Each carries 5 marks.                                      (4×5=20)

 
  11. What are services offered by  Merchant Bankers?
  12. Explain the stages of venture capital financing
  13. Explain the role and functions of SEBI?
  14. How does the mechanism of factoring work?
  15. Explain the organizational structure of mutual fund?
  16. How does factoring differ from discounting?
 

SECTION – C

 
III) Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)                                                                                                 
  17. Explain the various  Money Market instruments.
  18. Enumerate the kinds of Mutual funds schemes?
  19. Explain six different types of non-fee based financial services.
  20. Explain the process of Credit Rating and its benefits.
  21. Examine the kinds of leasing?
 

SECTION – D
IV) Case Study  – Compulsory question.                                                             (1×15=15)                                                                                           
  22. SBI Capital Markets Ltd. (SBICAP) is India’s largest domestic Investment Bank, offering the entire gamut of investment banking and corporate advisory services. These services encompass Project Advisory and Loan Syndication, Structured Debt Placement, Capital Markets, Mergers & Acquisitions, Private Equity and Stressed Assets Resolution.

We are a complete solutions provider offering diversified financial advisory and investment banking services, innovative ideas and unparalleled execution to our client base across all stages of the business cycle. Our services range from venture capital advisory, project advisory, buy and sell-side advisory, accessing financial markets to raise capital and even restructuring advisory in their turn-around phases.

 

SBICAP is the sole Indian member of M&A International. M&A International Inc. offers the unparalleled resources of over 600 professionals in 46 M&A advisory and investment banking firms operating in 40 countries. Over the past 5 years, M&A International members have closed more than 1300 transactions of over USD 75 billion in transaction value.

Founded in August 1986, SBICAP is a wholly owned subsidiary and the Investment Banking arm of State Bank of India (SBI), the largest commercial bank in India.

SBICAP was set up as a wholly owned subsidiary of SBI and even today, apart from the Chairman, the top management of SBICAP is almost entirely composed of executives on deputation from SBI. There is thus a constant interaction between the two organisations, especially at the higher levels. Further, SBI and SBICAP operate in complementary fields, and synergies are leveraged with SBI as well as other government companies. Despite this, SBI and SBICAP maintain a formal relationship as is necessary between a Commercial Bank and an Investment Bank.

Our Values
SBICAP, India’s leading investment bank and project advisor, is known for its astute professionalism and business ethics. We firmly believe that in our client’s happiness lies our own.

Our Mission
To provide credible, professional and customer-focused world-class investment banking services.

Our Vision
To be the best India based Investment Bank.

Headquartered in Mumbai, SBICAP has offices in all the major business hubs in India and has five subsidiaries – SBICAP Securities Ltd.SBICAP Trustee Co. Ltd.SBICAP (UK) Ltd.SBICAP (Singapore) Ltd.SBICAP Ventures Ltd.

 

Questions:

a.                                                       What are the services that are offered by SBICAP?

b.                                                     What are the similarities and dissimilarities between SBI and SBICAP?

c.                                                     What is the role played by M & A International?

 

 

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