MF0017-Merchant Banking and Financial Services

Spring-2016
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Master of Business Administration - MBA Semester 4
MF0017-Merchant Banking and Financial Services
(Book ID: B1815)
Assignment (60 Marks)
Note: Answers for 10 marks questions should be approximately of 400 words. Each question is
followed by evaluation scheme. Each Question carries 10 marks 6 X 10=60.
Q1. Rating methodology is used by the major Indian credit rating agencies. Explain the main
factors of that are analyzed in detail by the credit rating agencies.
(Business risk analysis, financial analysis, Management evaluation, Geographical analysis,
Regulatory and competitive environment, Fundamental analysis) 2, 2, 2,2,1,1
Answer. Rating Methodology used by the major Indian credit rating agencies is more or less the
same. The rating methodology involves an analysis of all the factors affecting the creditworthiness
of an issuer company e.g. business, financial and industry characteristics, operational efficiency,
management quality, competitive position of the issuer and commitment to new projects etc. A
detailed analysis of the past financial statements is made to assess the performance and to
estimate the future earnings. The company’s ability to service the debt obligations over the
Q2. Give the meaning of the concept of venture capital funds. Explain the features of venture
capital fund.
(Meaning of venture capital funds, Features of venture capital funds) 3, 7
Answer. Venture capital is the money provided by investors to start firms and small businesses
with long-term growth potential. This is a very important source of funding for start-ups that do
not have access to capital markets. It typically entails high risk for the investor, but it has the
potential for above-average returns.
Q3. Hire purchase is one of the important concepts. There are certain features of hire purchase
agreement so explain the points of it. Differentiate between hire purchase and leasing.
(Concept of hire purchase, Differences between hire purchase and leasing) 5, 5
Answer. In a hire purchase system, the buyer acquires the property by promising to pay in
monthly, quarterly and half-yearly installments. The period of payment has to be fixed while
signing the hire sale agreement. Though the buyer acquires the asset after signing the agreement,
the title of ownership remains with the vendor until the buyer pays the entire liability. When the
buyer pays the entire installment and any other obligation according to hire purchase agreement,
only then the title of ownership of goods would be transferred to the hirer. If the hirer makes any
default in the payment of any installment, the hire vendor has the right to repossess the goods. In
this case, the amount that is already paid so far by the hirer will be forfeited.
Q4. Explain the concept of Depository receipts. Write down the difference between American
Depository Receipts (ADR) and Global Depository Receipts (GDR) also mention the issues
involved in ADR/GDR.
(Explanation of Depository Receipts, Differences between ADR and GDR, Issues involved in
ADR/GDR) 4, 3, 3
Answer. Depository receipts are securities that are traded in foreign currency. These receipts are
issued by the foreign bank or institution which acts as a depository of shares issued by a domestic
company.
Depository receipts can be classified into sponsored and unsponsored ones.
Q5. What is Online Trading? Explain the process of online trading.
(Measuring and explanation of Online Trading, Explanation of process of Online trading) 6, 4
Answer. Online trading is one of the crucial financial services provided by financial institutions
and merchant bankers. For example, Indiabulls Securities Limited is one of India’s foremost stock
brokerage house having a pan India presence. The organization is a pioneer in providing online
stock trading platform in India and currently has a customer base of seven lacs customers.
Q6. Write short notes on:
a. Depository Participants
b. Benefits of Depository Systems
Answer. a. Depository Participants: All the functions performed by depositories are actually
executed by the depository participants (DPs). All activities related to recording of allotment of
securities, transfer of securities etc. are executed through depository participants and no investor
can directly open an account with a depository. A depository can enter into an agreement with
various depository participants who would work as agents of the depository. Depository
Participant works as an intermediary between the investor and depository and they are called as
Spring-2016
Get solved assignments at nominal price of Rs.125 each.
Mail us at: [email protected] or contact at
09882243490

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