MA0041 & MERCHANT BANKING AND FINANCIAL SERVICES

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ASSIGNMENT

DRIVE	FALL 2014
PROGRAM	MBADS (SEM 4/SEM 6) MBAFLEX/ MBA (SEM 4) PGDBMN (SEM 2)
SUBJECT CODE & NAME	MA0041 & MERCHANT BANKING AND FINANCIAL SERVICES
BK ID	B1812
CREDITS	4
MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Q. 1. Explain the concept of merchant banking. Write general obligations and responsibilities of merchant bankers

Answer:Merchant bank is a bank that deals mostly in (but is not limited to) international finance, long-term loans for companies and underwriting. Merchant banks do not provide regular banking services to the general public. Their knowledge in international finances make merchant banks specialists in dealing with multinational corporations.

Code of conduct: Every merchant banker has to abide by the code of conduct as specified below:

A merchant banker in the conduct of his business has to

Q. 2. Write short notes on:

a) Pre-issue activities of merchant banker

b) Post-issue activities of merchant banker

c) Book building 75 percent

Q. Pre-issue activities of merchant banker

Answer: Documents to be submitted along with Offer Document by the Merchant Banker:

·         MOU

·         Inter-se Allocation of Responsibilities

·         Due-Diligence Certificate

·         Certificates signed by Company

·          

·          

Q. b) Post-issue activities of merchant banker

Answer:

·         The post issue lead merchant banker shall ensure the submission of the post issue monitoring reports.

·         Due diligence certificate has to be submitted with the final post issue monitoring report. The post-issue lead merchant banker shall file a due diligence certificate in the format specified along with the final post issue monitoring

·          

Q. c) Book building 75 percent  

Answer: The 75 percent book building option of securities is offered on a firm basis where a minimum of 25 percent of the securities is offered to the public.

The following steps are involved in this process:

1) Eligibility: All corporates eligible

Q. 3. What is loan syndication? Explain the benefits of loan (Credit) Syndication and various instruments for loan syndication.

Answer: Loan syndication is mainly used in extremely large loan situations, syndication allows any one lender to provide a large loan while maintaining a more prudent and manageable credit exposure, because the lender isn't the only creditor. Loan syndication is common in mergers, acquisitions and buyouts, where borrowers often need very large sums of capital to complete a transaction, often more than a single lender is able or willing to provide. It

Q. 4.Explan all the types of leasing. Explain the limitation and problems in leasing.

Answer: There are different kinds of lease arrangement. It makes sense to consider them all to see which is best suited to your business, your particular circumstances and the asset that you are acquiring.

Finance Lease and Operating Lease: Finance lease, also known as Full Payout Lease, is a type of lease wherein the lessor transfers substantially all the risks and rewards related to the asset to the lessee. Generally, the ownership is transferred to the lessee at the end of the economic life of the asset. Lease term is spread over the major part of the asset life.

Q. 5. Explain the features of factoring. Write the advantages and disadvantages of factoring.

Answer: Factoring is defined as “an outright purchase of credit approved accounts receivables, with the factor assuming bad debt losses.”

The modern factoring involves a continuing arrangement under which a financing institution assumes the credit control/protection and collection functions for its client, purchases his receivables as they arise (with or without recourse to him for credit losses

Q. 6. Write the features of money markets in India. Explain the participants in the money market.

Answer:A money market is a market for borrowing and lending of short-term funds. It deals in funds and financial instruments having a maturity period of one day to one year. It is a mechanism through which short-term funds are loaned or borrowed and through which

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