Management of Financial Services (VVN)
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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?
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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 ..
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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?
1. Formal merchant banking activity in India was originated in______.
1967
1968
1969
1961
2. Any change in flow of funds and the demand of them, is clearly reflected in
Money Market
Capital Marlet
Share Market
Insurance Market
3. Lead merchant banker should advice the issuer to enter into ——– with a particular intermediary for the purpose of issue management.
Agreement
Petition
MOU
Writ
4. In India, merchant-banking activity was originated with the merchant banking division set up by the __________.
PNB
Grindlays Bank
SBI
RBI
5_______ operates in Inter-bank call money market.
Scheduled Banks
Private Banks
Public Banks
All
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6. The number of lead merchant bankers may not exceed in case any issue of, issue size 200crore to 400crore.
3
4
5
6
7. A merchant bank can help an organization specifically in promotional functions, ——————–.
Sponsoring the Issue
Marketing
Both
None
8. ————– is a financial intermediary who helps to mobilize and transfer capital from those who possess it to those who need it.
Venture Capital
Lease Finance
Merchant Banker
Hire Purchaser
9. State Bank of India started merchant banking in ______
1971
1973
1972
1976
10 ————- is a long term risk capital to finance high technology projects which involve risk but at same time has strong potential for growth.
Lease Finance
Merchant Banker
Venture Capital
Hire Purchaser
11 Secondary markets in treasury bills require involvement of ________ and _______
Brokers
Dealers
None
Both
12 The first bank to set up a separate merchant banking division in India.
National & Grin days bank
PNB
SBI
HDFC
13 The early growth of merchant banking in the country is assigned to th
FERA, 1973
FERA, 1975
FERA, 1979
None of these
14 Which of the following is not a fee-based financial service?
Lease Financing
Hire Purchase
Instalment
Advance
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15 Banks implement the RBI’s _______ policies.
Monetay
Credit
Both
None
16 The term ‘Merchant Bank’ is used in:
US
India
Australia
UK
17 —————– covers the entire range of services provided by a merchant banker.
Project Counselling
Corporate Counselling
Credit Ratings
Prospectus Issue
18 Functions of financial services exclude ———————-.
Leasing
Hire Purchase
Instalment
Collection of Taxes
19 _____ is basically a savings and investment corporation.
LIC
UTI
HDFC
ICICI
20 Financial service companies exclude ———————-.
Insurance Banks
Commercial Banks
Sole Propreitorship
Hire Purchaser
21 SFC, SIDC are …………….. Lavelfinancial institutions?
Regional
National
State
Local
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 —————-.
Venture Capital
Hire Purchase
Instalment
Advance
23 Merchant bankers are
Merchants
Bankers
None
Both
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24 Different enactments for raising funds from the capital market:
Companies Act
Income Tax Act
FERA, 1973
All
25 Categories of securities issue:
Public Issue
Right Issue
Private Placement
All
26 Category 1 merchant bankers can act as .
Advisor
Underwriter
Consultant
All
27 Merchant banker shall not associate with any business other than that of the securities market
TRUE
FALSE
None
All
28 In simple terms, the management of issues for raising funds through various types of instruments by companies is known as ………….
Lead Management
Merchant Banking
Issue Management
Public Issue Management
29 The number of lead merchant bankers may not exceeds in case any issue of , issue size less than Rs.50crore,number of MBs —————–.
1
3
2
5
30 Insurance is a ———————.
Instrument
Contract
Agreement
Ranking
31 —————– is a method of renting assets.
Hire Purchase
Leasing
Hedge Finance
Credit Rating
32 ————– is a financial intermediary who helps to mobilize and transfer capital from those who possess it to those who need it.
Hire Purchase
Leasing
Hedge Finance
Venture Capital
33 The first nationalized bank in India to start a VCF —————-.
Canara
Dena
HDFC
PNB
34 The term _____ is defined as a central location for keeping securities on deposit.
Financial Services
Depository
Financial Markets
Financial Instruents
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35 It is a process by which a demand for the securities proposed to be issued by a body corporate is elicited.
Book Building
Share Certificate
Promoter Issue
All
36 The number of lead merchant bankers may not exceed in case any issue of, issue size 200crore to 400crore.
3
4
5
6
37 The ______ is the apex organization in the Indian money market.
SBI
PNB
IOB
SBI
38 ______ is regarded as the fourth element of the financial system.
Financial Services
Financial Institutions
Financial Markets
Financial Instruents
39 Private placement covers:
Equity
Preference
Debentures
All
40 CRISIL has been promoted by ………….
ICICI
UTI
Both
None
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