Sunday, 25 June 2017

ma0043 smu mba spring 2017 (jul/aug 2017 exam) IVth sem assignment

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DRIVE Spring 2017
PROGRAM MBA
SEMESTER IV
SUBJECT CODE &
NAME
MA0043/MBF 304
CORPORATE BANKING


1 Explain the Letters of Credit mechanism practiced in international banking.
Letters of Credit mechanism in international banking

Answer: Letters of Credit Mechanism
Any business/industrial venture involves purchase transactions related to machine/other capital goods and raw material etc., and also sale transactions related to the products. The customer may, therefore, find



2 Compare and contrast financial and operating lease.
Financial and operating lease

Answer: Financial Lease
One of the fundamental features of a financial bank lease is a condition in accordance with which the lesser agrees to transfer the title for the asset at the completion of the lease period at a nominal cost. This kind of lease also gives an option to the lessee to purchase the utilized asset when the lease period is over. On the


3 How do the commercial banks evaluate term loan credit proposals ?
Evaluation of term loan credit proposals by banks

Answer: A banker basically assesses the viability and feasibility of a project on the followingfour parameters:
(i)                 An
(ii)                



4 “Venture capital is the leading source of finance that meets the needs of start-upenterprises.” Explain the concept of venture capital and justify the above statement.
Role of venture capital to finance start up enterprises

Answer: Venture capital (VC) is the leading source of finance to meet the requirements of new entrepreneurs. Usually the return on investment varies, and such types of financing aids in buy-outs, acquisition projects, joint ventures, start-up projects, trade expansion projects, and even in business turnarounds. These projects happen to be widely technological in approach. This kind of financing is associated with high risk levels, where the investment proposal is based on the



5 Explain the role of Hypothecation, Pledge, Assignment and Mortgage in corporate finance.
Role of Hypothecation, Pledge, Assignment and Mortgage in corporate finance

Answer: Hypothecation: As per Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002 (Section 2n), hypothecation has been defined as ‘a charge in or upon any movable property, existing or future, created by a borrower in favour of a secured creditor without delivery of possession of the movable property to such creditor, as security for


6 Explain some of the important exchange rate quotes in foreign exchange transactions made by banks.
Important exchange rate quotes in foreign exchange mechanism

Answer: Important exchange rate quotes
(i)                 Spot and forward rates: The current exchange rate of a spot transaction is known as the ‘spot rate’. In a spot transaction, the settlement is usually done within two business days and such rates are called ‘forward rates’. The forward transactions therefore involve a delivery date in the future, which may extend even up to a year. As the

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(ii)                

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