LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com DEGREE EXAMINATION – COMMERCE

AT 09

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 )

 

1. What do you mean by merchant banking?

 

2. What is due diligence certificate?

 

3. What is credit syndication?

 

4. List out the package of factoring.

 

5. What is meant by ESOP?

 

6. What is operating lease?

 

7. Which assets can be securitised?

 

8. Enlist the serious defaults committed by a merchant banker.

 

9. What do you mean by forfaiting?

 

10. List out any four leading factors in India.

 

SECTION – B

Answer any five questions:                                                                    ( 5 x 8 = 40 )

 

11. How do you categorise the merchant bankers?

 

12. What are the features of venture capital?

 

13. Explain the process of securitisation.

 

14. What are the merits of leasing?

 

15. Distinguish between factoring and bank financing.

 

16. Discuss the working of Depository system.

 

17. How is accounting done for financial lease with respect to Lessor?

 

 

 

 

 

18. 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

sales.

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 )

 

19. Explain the functions of Merchant Banker?

 

20. (a) What are the stages of venture capital financing?

• What are the criteria to be considered while analyzing venture capital proposal?

 

21. 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?

Discount Rate	Years
	1	2	3	4	5	6	7	8	9	10
12%	0.893	0.797	0.712	0.636	0.567	0.507	0.452	0.404	0.361	0.322

 

 

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – COMMERCE

TH 17

FIFTH SEMESTER – APRIL 2007

CO 5402 – FINANCIAL SERVICES

 

 

 

Date & Time: 04/05/2007 / 1:00 – 4:00 Dept. No.                                              Max. : 100 Marks

 

 

PART – A

                                                                                                                           (10 x 2 = 20)

Answer ALL questions

 

1. What do you mean by Merchant Banking?

 

2. Write the role of merchant bankers in the issue of prospectus.

 

3. Narrate the term Consortium Finance.

 

4. List out the elements of factoring.

 

5. What is recourse factoring?

 

6. What are the demerits of forfaiting?

 

7. Write a note on “Seed Capital”.

 

8. Define securitisation.

 

9. What is ESOP?

 

10. Give the meaning of financial lease.

 

PART – B

                                                                                                                           (5 x 8 = 40)

Answer any FIVE questions

 

11. How does merchant banking differ from commercial banking?

 

12. Discuss the role of merchant banker in public issue.

 

13. Briefly explain the stages of venture capital.

 

14. What is forfaiting? Differentiate factoring from forfaiting.

 

15. Write a note on lease evaluation from lessor and lessee point of view.

 

16. Bring out the merits and demerits of leasing.

 

17. Explain the process of securitisation.

 

 

 

 

18. The annual turnover of M/s. Welcome Ltd is Rs.6,00,000,  of which  80%  is  credit.

Customers are allowed one month to clear off their dues.  M/s. Royal Factors Ltd.  is

willing to advance  90% of the  bills raised on credit for a fee of  2%  a month  plus a

commission  of  4%  of the total amount of debts. As a result of  this arrangement, the

company is likely to save Rs.2160 annually in management costs and avoid bad debt

at  1%  on credit sales. A  Pune-based  NBFC  which offers  corporate loans has come

forward  to  make  an  advance  equal  to  90%  of the debts at an interest of  18%  p.a.

However, its service charges will be at  3%  on the debts. Would you accept factoring

or the offer of the NBFC ? Comment.

 

PART – C

                                                                                                                           (2 x 20 = 40)

Answer any TWO questions

 

19. Describe the functions of a merchant banker.

 

20. Explain the importance of venture capital financing and bring out the reason for its

slow growth in India.

 

21. M/s. Global Travels Ltd. wishes to acquire an imported car costing Rs.10,00,000. It is

faced with 2 options:

Option I: To acquire it by taking a 15% Bank Loan repayable in 5 equal instalment at

the end each year along with interest.

Option II: To lease the asset  at  a  rental of  Rs.220  per  thousand  of  the asset  value

payable at the end of each year for 5 years.

The tax rate is determined at 50 % and Capital discount rate is estimated at 16%. The

asset  is  expected  to have  a  life of  8 years  with a scrap value of  50% of  the book

value at the end of its life time. The  rate  of  depreciation  is  determined  at  20% on

diminishing balance method. Which option would you recommend? Comment.

 

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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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       LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – COMMERCE

KP 22

FIFTH SEMESTER – April 2009

CO 5402 – FINANCIAL SERVICES

 

 

 

Date & Time: 30/04/2009 / 1:00 – 4:00   Dept. No.                                                    Max. : 100 Marks

 

 

PART – A

ANSWER ALL QUESTIONS                                (10 x2=20)

1. Who is a merchant banker?
2. What is the role of merchant banker in the issue of prospectus?
3. Write a note on forfaiting in India.
4. List out the key elements of factoring?
5. What are the benefits of financial factoring?
6. What do you understand by SPV?
7. Write a note on hands-holding strategy of Venture Capital Institutions?
8. Explain the term ESOP.
9. What is consortium finance?
10. What are the conditions laid down by SEBI pertaining to pre-issue obligations?

 

PART – B

         

ANSWER ANY FIVE QUESTIONS                     (5 x 8=40)

 

1. What are the drawbacks of merchant banks?
2. State the role of merchant bankers in a public issue.
3. How do you evaluate lease from lessee point of view?
4. What are the merits of leasing?
5. What are the various types of factoring?
6. Briefly explain the process of securitization.
7. Write a note on First Chicago Model of venture capital.
8. M/s. Digger Earthmoving Equipment wishes to purchase an equipment costing Rs.250000 having a life of 5 years and a residual value of Rs.50000 at the end of its life. The firm provides depreciation on original cost method. The firm’s revenue is expected to increase by Rs.150000 p.a. and raise its operating expenses (including depreciation and interest) by Rs.70000 p.a. Tax rate is 50% and the cost of capital is 10%. The asset can also be leased for a yearly rental of Rs.65000 p.a. Its incremental revenue will be Rs.150000 p.a. and the expected operating expenses Rs.60000 p.a. Evaluate the proposal.

 

PART – C

     

ANSWER ANY TWO QUESTIONS                     (2 X20=40)

 

1. What is Venture Capital? What are the reasons for its slow growth in India?
2. (a)Explain the process of forfaiting.

(b)Bring out the merits and demerits of forfaiting.

1. Discuss the various types of leasing.

 

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – COMMERCE

FIFTH SEMESTER – APRIL 2012

CO 5402 – FINANCIAL SERVICES

 

 

Date : 30-04-2012              Dept. No.                                        Max. : 100 Marks

Time : 1:00 – 4:00

 

SECTION – A              ANSWER ALL QUESTIONS                                      (10×2=20)

 

1. What is scripless trade?
2. Indicate the role of SPV in securitization.
3. What is consortium finance?
4. Distinguish between financial turn around and management turn around.
5. Explain the concept of sale and lease back.
6. State any two benefits of securitization.
7. Mention the key elements of factoring.
8. How is seed capital helpful to the borrowing concern?
9. What are the reforms made by SEBI for the merchant banker?
10. Why is a due diligence certificate important?

SECTION-B                 ANSWER ANY FIVE QUESTIONS                            (5X8=40)

 

1. Explain the process of securitization.
2. Distinguish financial lease and operating lease.
3. Explain the importance of venture capital financing.
4. Explain the procedure in depository system.
5. State the responsibilities of merchant banker in Rights Issue.
6. Elucidate the process of forfaiting.
7. How is lease evaluated from the lessee and lessor point of view?
8. The turnover of A Ltd is Rs.60 lakhs of which 80% is on credit. Debtors are allowed 1 month to clear off their 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% of the total amount of debts.     A Ltd as a result of this arrangement is likely to save Rs. 21,600 annually in management costs and avoid bad debts at 1% on credit sales. A scheduled bank has come forward to make an advance equal to 90% of the debts at an interest of 18% p.a. However its processing fees will be at 2.5% on the debts. Suggest whether to accept factoring or the offer made by    the bank?

SECTION – C              ANSWER ANY TWO QUESTIONS                (2X20=40)

 

1. What are the various functions of a merchant banker?
2. (a) Explain the types of factoring.

(b) Write the merits and demerits of factoring.

 

21. ABC Ltd wishes to acquire a computer costing Rs.1, 00,000. It is faced with two options. (a) To acquire the computer by taking a 15% p.a loan from HDFC bank repayable in five equal installments at the end of each year together with interest.

(b) To acquire the asset at a lease rental of Rs. 320 per Rs. 1000 on the asset value payable at the end of each year for five years.

If the tax rate is 50%, cost of capital is 16% and the asset has five years of life with a scrap value of 50% of the book value at the end of its life, which option would you recommend. Assume the company charges depreciation @ 20% p.a on WDV method.

 

 

 

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