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ADL 55 Management of Financial Services V4

Assignment A
1. Discuss the evolution of Financial services in India. What are the problems
faced by financial services industry in India?
2. Mutual funds are an important segment of financial markets. How is this role
performed? Also discuss the management of a mutual fund company.
3. Why do you think financial markets are required. What are your views on
proper regulation of these markets?
4. Why should a public issue be marketed? What are the issues involved in
marketing a public issue?
5. Differentiate 'Financial restructuring' and 'Organziational restructuring'
What factors in your view affect the decision of merger or takeover of a firm?
6. Compare and contrast 'Leasing' and 'Hire Purchasing'. Why do companies go for
leasing of assets? Briefly explain?
7. Stock exchanges in India have not served their purpose.' Do you agree?
Validate your arguments?
8. Explain the different stages in which a venture capital firm finances the
requirements of the companies which approach it for financing?

Assignment B
Case Detail:

What is a benchmark in a mutual fund?

Investors are often told they could have earned xx% return if they had invested in
a particular fund. Many of them are astonished seeing these returns. Financial
planners suggest that mutual fund returns should not be looked at in isolation. It
must be judged in comparison to the broader markets to understand the real
performance. This is where a mutual fund benchmark is useful.

What is a benchmark?
A benchmark is a standard against which the performance of a mutual fund can be
measured. Since 2012, SEBI made it mandatory for fund houses to declare a benchmark
index. This benchmark is independent and is based on the objectives of your fund.
Most large-cap oriented equity funds benchmark themselves against the Sensex or the
Nifty. Other benchmarks are CNX Midcap, CNX Smallcap, S&P BSE 200, etc. Hence, an
investor in an equity mutual fund benchmarked against the CNX Midcap, should
compare his returns accordingly.

How do you measure performance of a mutual fund against its benchmark?

If the scheme of the mutual fund that you have invested in delivers higher returns
than the benchmark, it is said to have outperformed and vice-versa. On the other
hand, if the benchmark index falls over a period of time and during the same time,
your fund's NAV falls lesser (in percentage terms), your fund can still be said to
have outperformed the benchmark. Financial planners point out that if an actively
managed fund delivers returns in-line with the benchmark, it should be considered
as underperformance. This is because a professional fund manager has charged you a
fee and only delivered returns equal to an index fund (a passively managed scheme
that does not engage a fund manager).

What is the importance of long-term performance?

When comparing a scheme with its benchmark, ensure that you consider the
performance of the fund over longer time frames and not just short time frame. Look
at data for one, three, five and even 10-year returns. When a fund consistently
outperforms its benchmark indices, it indicates consistency in performance.
However, the benchmark performance is one way to choose a fund. Financial advisors
suggest that you understand y...

Question
1. What the case is all about?
2. Which benchmark, would you suggest for mutual funds?
3. How do you measure performance of a mutual fund against its benchmark?

Assignment C

Question No. 1
Formal merchant banking activity in India was originated in______.

Options
a) 1967
b) 1968
c) 1969
d) 1961

Question No. 2
Any change in flow of funds and the demand of them, is clearly reflected in

Options
a) Money Market
b) Capital Marlet
c) Share Market
d) Insurance Market

Question No. 3
Lead merchant banker should advice the issuer to enter into -------- with a
particular intermediary for the purpose of issue management.

Options
a) Agreement
b) Petition
c) MOU
d) Writ

Question No. 4
In India, merchant-banking activity was originated with the merchant banking
division set up by the __________.

Options
a) PNB
b) Grindlays Bank
c) SBI
d) RBI

Question No. 5
_______ operates in Inter-bank call money market.

Options
a) Scheduled Banks
b) Private Banks
c) Public Banks
d) All
Question No. 6
The number of lead merchant bankers may not exceed in case any issue of, issue size
200crore to 400crore.

Options
a) 3
b) 4
c) 5
d) 6

Question No. 7
A merchant bank can help an organization specifically in promotional functions,
--------------------.

Options
a) Sponsoring the Issue
b) Marketing
c) Both
d) None

Question No. 8
-------------- is a financial intermediary who helps to mobilize and transfer
capital from those who possess it to those who need it.

Options
a) Venture Capital
b) Lease Finance
c) Merchant Banker
d) Hire Purchaser

Question No. 9
State Bank of India started merchant banking in ______

Options
a) 1971
b) 1973
c) 1972
d) 1976

Question No. 10
------------- is a long term risk capital to finance high technology projects which
involve risk but at same time has strong potential for growth.

Options
a) Lease Finance
b) Merchant Banker
c) Venture Capital
d) Hire Purchaser

Question No. 11
Secondary markets in treasury bills require involvement of ________ and _______

Options
a) Brokers
b) Dealers
c) None
d) Both
Question No. 12
The first bank to set up a separate merchant banking division in India.

Options
a) National & Grin days bank
b) PNB
c) SBI
d) HDFC

Question No. 13
The early growth of merchant banking in the country is assigned to th

Options
a) FERA, 1973
b) FERA, 1975
c) FERA, 1979
d) None of these

Question No. 14
Which of the following is not a fee-based financial service?

Options
a) Lease Financing
b) Hire Purchase
c) Instalment
d) Advance

Question No. 15
Banks implement the RBIs _______ policies.

Options
a) Monetay
b) Credit
c) Both
d) None

Question No. 16
The term Merchant Bank is used in:

Options
a) US
b) India
c) Australia
d) UK

Question No. 17
----------------- covers the entire range of services provided by a merchant
banker.

Options
a) Project Counselling
b) Corporate Counselling
c) Credit Ratings
d) Prospectus Issue

Question No. 18
Functions of financial services exclude ----------------------.

Options
a) Leasing
b) Hire Purchase
c) Instalment
d) Collection of Taxes

Question No. 19
_____ is basically a savings and investment corporation.

Options
a) LIC
b) UTI
c) HDFC
d) ICICI

Question No. 20
Financial service companies exclude ----------------------.

Options
a) Insurance Banks
b) Commercial Banks
c) Sole Propreitorship
d) Hire Purchaser

Question No. 21
SFC, SIDC are .. Lave financial institutions?

Options
a) Regional
b) National
c) State
d) Local

Question No. 22
Financial services offered financing risk project e.g. Risk capital scheme of I F C
I venture capital fund of I D F I etc. to provide ----------------.

Options
a) Venture Capital
b) Hire Purchase
c) Instalment
d) Advance

Question No. 23
Merchant bankers are

Options
a) Merchants
b) Bankers
c) None
d) Both

Question No. 24
Different enactments for raising funds from the capital market:

Options
a) Companies Act
b) Income Tax Act
c) FERA, 1973
d) All
Question No. 25
Categories of securities issue:

Options
a) Public Issue
b) Right Issue
c) Private Placement
d) All

Question No. 26
Category 1 merchant bankers can act as.

Options
a) Advisor
b) Underwriter
c) Consultant
d) All

Question No. 27
Merchant banker shall not associate with any business other than that of the
securities market

Options
a) TRUE
b) FALSE
c) None
d) All

Question No. 28
In simple terms, the management of issues for raising funds through various types
of instruments by companies is known as .

Options
a) Lead Management
b) Merchant Banking
c) Issue Management
d) Public Issue Management

Question No. 29
The number of lead merchant bankers may not exceeds in case any issue of , issue
size less than Rs.50crore,number of MBs -----------------.

Options
a) 1
b) 3
c) 2
d) 5

Question No. 30
Insurance is a ---------------------.

Options
a) Instrument
b) Contract
c) Agreement
d) Ranking

Question No. 31
----------------- is a method of renting assets.

Options
a) Hire Purchase
b) Leasing
c) Hedge Finance
d) Credit Rating

Question No. 32
-------------- is a financial intermediary who helps to mobilize and transfer
capital from those who possess it to those who need it.

Options
a) Hire Purchase
b) Leasing
c) Hedge Finance
d) Venture Capital

Question No. 33
The first nationalized bank in India to start a VCF ----------------.

Options
a) Canara
b) Dena
c) HDFC
d) PNB

Question No. 34
The term _____ is defined as a central location for keeping securities on deposit.

Options
a) Financial Services
b) Depository
c) Financial Markets
d) Financial Instruents

Question No. 35
It is a process by which a demand for the securities proposed to be issued by a
body corporate is elicited.

Options
a) Book Building
b) Share Certificate
c) Promoter Issue
d) All

Question No. 36
The number of lead merchant bankers may not exceed in case any issue of, issue size
200crore to 400crore.

Options
a) 3
b) 4
c) 5
d) 6

Question No. 37
The ______ is the apex organization in the Indian money market.
Options
a) SBI
b) PNB
c) IOB
d) SBI

Question No. 38
______ is regarded as the fourth element of the financial system.

Options
a) Financial Services
b) Financial Institutions
c) Financial Markets
d) Financial Instruents

Question No. 39
Private placement covers:

Options
a) Equity
b) Preference
c) Debentures
d) All

Question No. 40
CRISIL has been promoted by .

Options
a) ICICI
b) UTI
c) Both
d) None

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