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DRIVE- SPRING 2014
PROGRAM- MBADS (SEM
4/SEM 6) MBAFLEX/ MBAN2 (SEM 4) PGDFMN (SEM 2)
SUBJECT CODE &
NAME- MF0017 & MERCHANT BANKING AND FINANCIAL SERVICES
Q1. Explain the
concept of book building and methods or guidelines of book building with 75 and
100 % of book building. (Explanation of concept of book building, Methods and
guidelines of book building, 75% book building, 100% book building) 2, 3, 3, 2
Answer: Book
Building
Book building is the process
through which the prices of IPOs (securities issued first time for public) are
obtained through the demand of market. Through the mechanism of book building,
companies can raise capital from the general public by offering Initial Public
Offers (IPOs) as well as by issuing Follow-on Public Offers (FPOs). In the
process of book building, the investors send their bids at the price which
seems reasonable within a price range. The prices quoted by both small
investors (retail
Q2. Issue
management is one of the important functions of merchant bankers and lead
bankers. Explain the two types of activities pre issue obligation and post
issue obligation. Also write on the concept of Application Supported by Blocked
Amount (ASBA). [Explanation of pre issue obligation, Explanation of post issue
obligation, Introduction of ASBA] 3, 5, 2
Answer: Pre-issue management
Pre-issue obligations: The pre-issue obligations are
detailed below:
(a) The lead merchant banker
shall exercise due diligence.
(b) The standard of due diligence
shall be such that the merchant banker shall satisfy himself about all
Q3. Write short
notes on:
a)Foreign Direct
Investment (FDI) and its role
b) Foreign Currency
Convertible Bonds(FCCB)
Answer:
Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI)
is an integral part of an open and effective international economic system and
a major catalyst to development.
According to the International
Monetary Fund (IMF) and Organization for Economic Co-operation
Q4. Depository
helps in the transfer of securities from one investor to another in an
electronic form. Write the differences between Bank and Depository. Explain the
functions performed by Depository. (Differences between Bank Vs Depository,
Explanation of functions performed by Depository) 5, 5
Answer:
Bank vs Depository
A depository functions like a
bank as banks deal with the funds of the clients and depository deals with the
holding of the security accounts. Both maintain their respective accounts in
obedience with the prevailing rules and by-laws. But there is a clear
demarcation in the functions performed by a
Q5. Every investor has his own risk perceptions and
objectives of investment. Write about Mutual funds also write down about the
benefits and disadvantages of Mutual funds which is very essential for all the
investors to know.( Introduction of mutual funds, Benefits of mutual funds,
Disadvantages of mutual funds) 2, 4, 4
Answer:
Mutual Funds
A mutual fund is an investment
company which pools together the funds of investors having a common objective.
The funds collected under one common objective are invested in various
investment avenues (equity, bond, preference shares, real estate, gold, off
shore funds etc.) and managed by professional fund managers. The whole
investment in a mutual fund is divided into various units and each investor is
known as a unit holder. The income generated from a fund is
Q6. Rating methodology is used by the major Indian credit rating agencies.
Explain on the main factors that are analyzed in credit rating agencies and
also on the limitations on the limitations of credit rating. (Explanation on factors analyzed in
credit rating agencies , Limitations of credit rating) 6, 4
Answer: Factors analyzed in credit rating agencies:
Credit ratings
provide individual and institutional investors with information that assists
them in determining whether issuers of debt obligations and fixed-income securities will be able to meet their obligations
with respect to those securities. Credit rating agencies provide investors with
objective analyses and independent assessments of companies and countries that
issue such securities. Globalization in the investment market, coupled with
diversification in the types and quantities of securities issued, presents a
challenge to institutional and individual investors who must analyze risks
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