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									                         BANGALORE MANAGEMENT ACADEMY
                                BANGALORE-560 037

                END TERM EXAMINATIONS-NOVEMBER 2008
                        MPFB BATCH V TERM I
            FINANCIAL INSTITUTIONS, MARKETS & INSTRUMENTS
Time: 3 hrs                                           Max. Marks: 100

Instructions:
       This examination is for 100 marks, scaled down to 50%.
       Do not scribble on the sides of the answer sheet, if you want to work out anything, write
       it on the last two pages of the answer sheet.
       Use only blue / black pens, I will not tolerate usage of pencil or red / pink and green pens.
       Give concepts explanation and recent Indian examples wherever possible.
       Be clear in your answers and keep answers crisp and to the point.
       Where an opinion or view is asked, give a decision after explaining your thoughts on the
       same.
       DO NOT copy! Stick to what you know and how well you know your stuff!

                                Section-A (6 x 5 = 30 Marks)
                        Answer any SIX questions briefly in this section

1. Why are bonds also called fixed income securities.
2. Define Risk, what are systemic and unsystemic risk.
3. What is money market, name a few money market products in India?
4. Distinguish between debt and equity? Give examples of why should a corporate choose to
   raise capital through debt or equity. Give examples of how investors decision is influenced
   by his desire to invest in debt or equity products.
5. What is the role of SEBI in India? What is its purpose in Indian capital markets?
6. Define derivatives, give some examples of derivative products.
7. Define a mutual fund, name some fund houses in India.

                                Section-B (10 x 2 = 20 Marks)
                             Complete the following in a few words

1.   Coupon means                                    7. Put Option is the buyers
2.   Cost of capital is also known as                8. Call option means the writer has to
3.   Formula for dividend yield                      9. A contract for delivery spot means
4.   LAF stands for                                      settlement will be
5.   PLR is                                          10. Yield curve is
6.   Futures contracts are




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                              Section-C (5 x 10 = 50 Marks)
                      Answer any FIVE questions briefly in this section

1. TATA motors has recently relocated its plant and this relocation costs approximately
   Rs. 2000 crores. As a financial expert, what would your suggestions be to enable TATA’s
   raise this capital?, Give 3-4 alternatives, the circumstances of each alternative, and explain
   why which would be the best alternative.

2. Sushila is a novice to the capital markets and wants to understand various aspects of the
   markets. Explain to Sushila the following concepts:
   a. Risk and return
   b. Various types of risks
   c. Hedging, leverage, speculation and arbitrage

3. Explain to Shri YAYA, the following options concepts:
   a. Call option
   b. Put option
   c. Exercise price
   d. Option Premium
   e. Option holder
   f. Option writer
   g. In the money option
   Take an example of an equity option, and explain with reference to that option the above.

4. Shri. Kezang has newly joined the treasury dept of a bank. As treasurer, please explain to
   Shri. Dorji the concept of yield curve, YTM and the different types of yield curve.

5. Mr.Nikhil as CFO of a large company is worried about stakeholders satisfaction. The
   company has paid up capital of Rs. 500 crores and reserves and surplus of Rs. 5000 crores.
   Explain each of the following and what will make stakeholders excited?
   a. Stock splits
   b. Rights issue
   c. Bonus issues
   d. Dividends
   e. Buy back of shares

6. Santosh J, is a novice investor to investing, As a mutual fund sales head, you will have to
   explain the basics of MF’s in India to him, so do explain to him the following:
   a. NAV
   b. Open ended fund v/s close ended fund
   c. NFO
   d. Value investing
   e. Systemmatic investment plan (SIP)
                                            *****

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