St. Joseph’s College of Commerce (Autonomous)
End Semester Examination –MARCH/APRIL 2014
B.COM – IV SEMESTER
FINANCIAL MARKETS & SERVICES
Time: 3 hours Max Marks: 100
Section – A
- Answer ALL the questions. Each carries 2 marks. (10 x 2 = 20)
- What do you mean by open repurchase agreement?
- Explain any two benefits of factoring?
- What are the objectives of credit rating
- Define a depository?
- What do you understand by Hybrid form of shares?
- Mention any two venture Capital Funding agencies in India
- Define leasing?
- Write any two characteristics of money market?
- What are the risks associated with mutual funds?
- State the limitations of credit rating?
Section – B
- Answer any FOUR Each carries 5 marks. (4 x 5 = 20)
- What is venture capital? Explain the various venture financing methods?
- Explain the process involved in credit rating a particular debt instrument of a company?
- Discuss the difference between factoring and discounting?
- Mention and briefly explain any five services that are provided by merchant banks?
- X is in need of equipment’s for his manufacturing purpose and he is in a dilemma whether to purchase the asset or to lease the same. You being a financing company who provides consultancy service, are expected to provide suggestions to your customer explaining the factors influencing lease vs buying decisions.
- Write a note on depository participant and explain any two depository participants that are regulated in India?
Section – C
- Answer any THREE questions. Each carries 15 marks. (3 x15 = 45)
- Explain the Indian Financial system in detail?
- Examine the importance of leasing and explain in detail the various kinds of leasing?
- XYZ co ltd is a venture capital funding agency and had invested in Mr.Ram’s business plan as an equity participant. Now the XYZ co has decided to exit from their investment. What are the various exit routes that are available for the company to quit from the business?
- Discuss the different types of factoring and their significance?
- Write short note on the following:
- CRISIL
- CARE
- SEBI
Section – D
- Case Study – Compulsory question. (15 marks)
22.
Mr. X completed his B.com from St. Joseph’s College of Commerce in the year 2005. After a year of searching for a job he couldn’t find one for himself. At the end of the year 2006, his father decided to give him his share of property, worth of rs. 10,00,000. Mr.X and his friends had a business plan to start up a new business. They all decided to pool in some money and borrow the rest from a venture capitalist as they did not want to risk the entire capital by themselves.
After months of deliberation, they prepared a plan and approached a venture capitalist. As they were well prepared with their business plan they could communicate their ideas effectively and efficiently and also they succeeded in convincing the venture capitalist to invest in their new venture. The venture capitalist agreed to provide only 75% of the capital, so the entrepreneurs decided not to invest their capital amount in purchasing of equipment’s rather they decided to enter into a contract with a financing company that would provide equipment’s on lease basis. The contract was finalized under financial lease type so that they have an option to buy the asset at the end of the contract term.
In the initial few years they were not able to make the expected profits and also there was a working capital crunch in their business, mainly because most of their business transaction were on credit basis and 30% of their debtors turned out to be defaulters. To overcome this situation in future they decided to sell their trade debts to a financing company that provide factoring service.
Along with this decision, Mr. X also applied other business strategies to overcome their working capital crunch. They also approached a merchant bank that can provide consultancy service. According to their guidance and Mr. X’s strategies, the firm could escape from the possibility of shut down. As the firm started to grow in good phase, they decided to invest their profits in other investment instruments both short term and long term so that they can make more profits and use the same for expanding their business.
After few years they decided to go public and to list their shares in the stock exchange as they were doing well in their business and also they wanted to expand their business.
Questions:
- What are the strategies that you would apply to overcome the working capital crunch in the business?
- Mention the various means of issuing the share to the public for the first time?
- Mention the various short term and long term investment opportunities available?