FMS QB

AVINASH DEGREE COLLEGE KUKATPALLY
COURSE : FINANCIAL MARKETS AND PAPER CODE : DSC 501

SERVICES
PROGRAM : BBA COURSE TYPE :
SEMESTER: V FACILITATOR :
Unit I
1 2 3 4 5 6 7 8 9 10
11 12 13 14 15 16 17 18 19 20
21 22 23 24 25
1 . The term ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ refers financial investment in a highly risky and growth oriented
venture with the objective of earning a high rate of return.
a. Venture capital b. Merchant banking c. Leasing d. none of these.
2 A banker may sign share transfer forms on behalf of his customer in the capacity of
________
a. Trustee b. Agent c. Attorney d. Administrator
3 Financial Services are classified into _______
a. Traditional& modern activities b. Capital& Money Markets c. Both d. None
4 A Lease is an agreement under which a company has a right make use of ______
a. Current Assets b. Fixed Assets c. Tangible Assets d. Capital Assets
5 Fund based & Non-Based activities are _______

a. Traditional Activities b. Modern Activities c. Money Market Instruments d None of these
6 LOC is __________
a. Line of control b. Loss of capital c. Letter of credit d. None of above
7 Project advisory service comes under ____________
a. Modern activity b. Traditional activity c. Joint venture d. Risk management
8 _________ refers to banks joining together for pooling loans
a. Merchant Banking b. Leasing c. Loans Syndication d .A& B
9 The click and portal model facilitate _________
a. Traditional banking b. Paperless banking c. Virtual banking d .None
10. Which of the following is not a fee‐based financial service?
a. Corporate counseling b. Lease financing c. Profit management d. Issue management.
11 Which of the following is not a fund based financial services.
a. Credit rating agencies b. Venture capital c. Consumer credit d. Factoring.
12 Find out odd one.
a. Fund based activity b. Fee based activity c. Modern activities d. Purchase of raw
materials.
13. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ is a fund based financial service, provides resources of finance receivable as
well as facilities the collection of receivables.
a. Leasing b. hedge finance c. Merchant banker d. Factoring.

14. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ is a service offered by a stock broker i.e.; buying and selling or dealing in
shares on behalf of the customers.
a. Lease finance b. Venture capital c. Merchant banker d. Stock broking.
15. N B H stands for ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
a. National house banker b. National house bank c. National house building d. National
housing bank.
16. N.B F C stands for ____________
a. Non banking finance companies’ b Non banking financial corporation c. Non bulk finance
companies d. None of these.
17. Financial service companies exclude ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
a. Commercial banks b. Insurance companies c. Sole proprietorship d. Crepitating agencies.
18. Specialized financial institution, are also known as ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
a. Leasing companies b. U T I c. N B F C s d. Development bank.
19. 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 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
a Seed capital b. Venture capital c. Primary fund d. secondary fund.
20. Identify odd one.
a. C R I S I L b. I C R A c. C A R E d.I C I C I.
21. Which of the following is not a fee‐based financial service?
a. Corporate counseling b. Lease financing c. Profit management d Issue management.
22. Which of the following is not a fund based financial services.
a Credit rating agencies b. Venture capital c. Consumer credit d. Factoring.
23. Find out odd one‐ Authorization criteria of merchant bankers.

a. All business performed b. professional competence c. Capital adequacy d. Past
experience.
24. Financial intermediaries provide services on the basis of non‐fund activities, also called
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
a. Participating activity b. Fee based activity c. Commission based activity d. Salary based
activity.
25. Functions of financial services exclude ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
a. Mobilization of savings b. Allocation of fund c. Specialized services d. Collection of

tax.
B) Fill In The Blanks
1) Suppliers of Financial Services include the bank and _______________
2) An important goal of financial service industry is to ___________________.
3) SLR ____________________________
4) Financial services is the product that is traded in _____________________
5) Non banking financial services can be classified as _______________________
6) Commercial banks are classified into primary functions and ____________________
7) FERA if ______________________________
8) Merchant bankers can charge ______ as maximum commission for whole of the issue
9) __________ is birthplace of modern banking.
10). Merchant banks pay significant role in ___________________.
11) The important goal of the financial services industry is to mobilize and allocate
______________
12) CARE __________________
13) CRISIL _________________________
14) ICRA _______________________________
15) DCR _________________________________

16) SEBI __________________________________
17) ___________ bonds are sold at a large discount to their nominal value
18) Term lending institution are _________________ intermediaries.
19)Two types of Options are ___________________
20) A _________________ is a security whose value depends upon the value of other basic
variables backing the security.
C) Concept questions
1. Merchant Banking
2. Loan Syndication
3. Leasing
4. Fund Based activities
5. Non-Fund based activities
6. Turnaround Shares
7. Active shares
8. Sweat Shares
9. Financial Services
10. Convertible bonds
11. Financial engineering.
12. Liberalization
13. Forex Market
14. Put Feature
15. Index links gilt bonds
16. WTO.
17. Carrot and stick bonds

18. Option bonds
19. Zero discount bonds
20. Easy Exit bonds
21. Mutual funds
22. Factoring
23. Capital formation.
24. GNP
25. SEBI
26. SEBI
Answers
1 2 3 4 5 6 7 8 9 10
a c b d a c a c c b
11 12 13 14 15 16 17 18 19 20
a d d d d a c d b d
21 22 23 24 25
b a a b d
Multiple choice answers explanation
1 . The term Venture capital refers financial investment in a highly risky and growth oriented
venture with the objective of earning a high rate of return. New Ventures are always befitted to
the development of economy.
2 A banker may sign share transfer forms on behalf of his customer in the capacity of Attorney.
Banker plays a major role if the transfer of asset in a venture of any organization.
3 Financial Services are classified into Capital& Money Markets Financial Services is a term
used to refer to the services provided by the finance market. Financial Services is also the term
used to describe organizations that deal with the management of money.
4 A Lease is an agreement under which a company has a right make use of Capital Assets.
A lease is a contract outlining the terms under which one party agrees to rent property owned by
another party
5 Fund based & Non-Based activities are Traditional Activities. The non fund based financial
services of the public sector banks include loan syndication, consultancy and advisory services,
capital issue management etc. Fund Based Financial Services (FBFS) are financing method that
is driven by the assets of companies.
6 LOC is Letter of credit Document issued by a third party that guarantees payment for goods
or services once the seller provides acceptable documentation
7. Project advisory service comes under Modern activity . Facilitating transactions (exchange
of goods and services) in the economy. Mobilizing savings (for which the outlets would
otherwise be much more limited). Allocating capital funds (notably
to finance productive investment).
8. Loans Syndication refers to banks joining together for pooling loans. Loan syndication is
the process of involving a group of lenders in funding various portions of a loan for a single
borrower. Loan syndication most often occurs when a borrower requires an amount too
large for a single lender to provide or when the loan is outside the scope of a lender's risk-
exposure levels
9. The click and portal model facilitate Virtual banking. Virtual or internet banking is
a system where all the transactions of the bank are done online and there are no physical
branches of the banks. ... Thus, users mostly use virtual banks for many services like-
checking the account balance, transfer funds, bill payments, etc
10. a fee‐based financial service is Lease financing A finance lease is a way of

providing finance – effectively a leasing company (the lessor or owner) buys the asset for the
user (usually called the hirer or lessee) and rents it to them for an agreed period
11 It is not a fund based financial services Credit rating agencies because The traditional
services which come under fund based activities are the following: a) Underwriting of or
investment in shares, debentures, bonds, etc of new issues (primary markets activities) b)
Dealing in secondary market activities.
12 Purchase of raw materials does not deal with the financial service activity it is very
important for the organization once the production activity starts. The raw materials are
the basic requirements for the organization
13. Factoring. is a fund based financial service, provides resources of finance receivable as
well as facilities the collection of receivables. Factoring is a financial transaction and a type of
debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party
(called a factor) at a discount. A business will sometimes factor its receivable assets to meet its
present and immediate cash needs
14. Stock broking is a service offered by a stock broker ie; buying and selling or dealing in
shares on behalf of the customers. Stock broking. the function of buying and selling financial
securities such as stocks shares and bonds through the stock market by a dealer (stockbroker)
who acts as an agent on behalf of clients wishing to buy or sell securities
15. N B H stands for .New housing bank. The National Housing Bank (NHB) is an apex level
financial institution catering to the housing sector in the country. It was established on July 9,
1988. It works as a facilitator in promoting housing finance institutions or providing assistance to
other institutions of such type.
16. N.B F C stands for Non banking finance companies A Non-Banking Financial Company
(NBFC) is a company registered under the Companies Act, 1956 engaged in the business of
loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by
Government or local authority or other marketable securities of a like nature, leasing, hire-
purchase, insurance
17. Financial service companies exclude Sole proprietorship business. Financial Services are
those organizations which take care of the business which have very high end demand in the
society and which help in innovation.
18. Specialized financial institution, are also known as. Development bank. They provide
medium and long-term finance to the industrial and agricultural sector. They provide finance to
both private and public sector. Development banks are multipurpose financial institutions
capital fund of I D F I etc. to provide Venture capital .Venture capital is a form of private
equity and a type of financing that investors provide to startup companies and small
businesses that are believed to have long-term growth potential. Venture capital generally
comes from well-off investors, investment banks and any other financial institutions
20. I C I C I :ICICI Bank Limited is an Indian multinational banking and financial
services company headquartered in Mumbai, Maharashtra with its registered office
in Vadodara, Gujarat. As of 2018, ICICI Bank is the second largest bank in India in terms of
assets and market capitalization. Industrial Credit and Investment Corporation of India
21 . Lease financing is not a fee‐based financial service A finance lease is a way of

user (usually called the hirer or lessee) and rents it to them for an agreed period. A finance
lease is defined in Statement of Standard Accounting Practice 21 as a lease that transfers.
.
22 Credit rating agencies As of now, there are six credit rating agencies registered under SEBI
namely, CRISIL, ICRA, CARE, SMERA, Fitch India and Brickwork Ratings. Ratings provided
by these agencies determine the nature and integrals of the loan. Higher the credit rating, lower is
the rate of interest offered to the organization
23. Authorization criteria of merchant bankers. All business performed Merchant Bank is a
company that provides services like fundraising activities like IPOs, FPOs, loans,
underwriting, financial advising or market making for big companies and individuals having
huge net worth but these merchant banks do not provide for the basic banking services such as
checking accounts, etc
24. Financial intermediaries provide services on the basis of non‐fund activities, also called ‐
Fee based activity. Fee Based Services Fee based financial services are those services wherein
financial institutions operate in specialized fields to earn a substantial income in the form
of fees or dividends or brokerage on operations. ... Credit cards charge interest and are primarily
used for short-term financing
25. Functions of financial services exclude Collection of tax. Banks earn revenue primarily on
the difference in the interest rates charged for credit accounts and the rates paid to
depositors. Financial services like these primarily earn revenue through fees, commissions, and
other methods like the spread on interest rates between loans and deposits.
Fill in the blanks answers
1. Financial institutions
2. mobilize and allocate savings
3. Statutory Liquidity Ratio
4. financial market
5. funded and non funded services
6. secondary functions
7. Foreign Exchange Regulation Act
8. 0.5 %
9. Europe
10. capital market
11. Savings.
12. Credit Analysis and Research Ltd
13. Credit rating Information services of India Ltd
14. Investment Information and Credit Rating Agency
15. India Duff Phelps Credit Rating Pvt Ltd
16. The Securities Exchange Board of India
17. Deep Discount
18. capital market
19. Call options and Put options
20. Derivative security
Concept based Answers
1. Merchant Banking : : A merchant bank is a company that conducts underwriting, loan

services, financial advising, and fundraising services for large corporations and high net
worth individuals. Unlike retail or commercial banks, merchant banks do not provide
services to the general public
2. Loan Syndication: Loan syndication is the process of involving a group of lenders in
funding various portions of a loan for a single borrower. Loan syndication most often
occurs when a borrower requires an amount too large for a single lender to provide or
when the loan is outside the scope of a lender's risk-exposure levels
3. Leasing : A lease is a contract outlining the terms under which one party agrees to rent
property owned by another party. It guarantees the lessee, also known as the tenant, use
of an asset and guarantees the lessor, the property owner or landlord, regular payments
for a specified period in exchange
4. Fund Based activities : The traditional services which come under fund based
activities are the following: a) Underwriting of or investment in shares, debentures,
bonds, etc of new issues (primary markets activities) b) Dealing in secondary
market activities
5. Non-Fund based activities : The non fund based financial services of the public sector
banks include loan syndication, consultancy and advisory services, capital issue
management etc.
6. Turnaround Shares : One of the main facets of value investing is turnaround investing.
This involves taking a position in a stock that has fallen out of favour—often due to bad
news initially associated with the company—and is therefore not perceived by the
majority of investors to be a worthwhile consideration
7. Active shares : Active Share is a measure of the percentage of stock holdings in a
manager's portfolio that differs from the benchmark index. The researchers conclude
managers with high Active Share outperform their benchmark indexes and Active
Share significantly predicts fund performance
8. Sweat Shares : sweat equity shares” means such equity shares as are issued by a
company to its directors or employees at a discount or for consideration, other than cash,
for providing their know-how or making available rights in the nature of intellectual
property rights or value additions, by whatever name called.
9. Financial Services : Financial Services is a term used to refer to the services provided by
the finance market. Financial Services is also the term used to describe organizations that
deal with the management of money. Examples are the Banks, investment banks,
insurance companies, credit card companies and stock brokerage
10. Convertible bonds : A convertible bond is a fixed-income corporate debt security that
yields interest payments, but can be converted into a predetermined number of common
stock or equity shares. The conversion from the bond to stock can be done at certain
times during the bond's life and is usually at the discretion of the bondholder
11. Financial engineering : Financial engineering is the application of mathematical
methods to the solution of problems in finance. It is also known as financial mathematics,
mathematical finance, and computational finance. Financial engineering draws on tools
from applied mathematics, computer science, statistics, and economic theory.
12. Liberalization: Liberalization refers to laws or rules being liberalized, or relaxed, by a
government. ... While liberal is used to refer to more than just politics––you can have
liberal parents––liberalization is used only when speaking of economic or social policies
or other government regulations
13. Forex Market : The foreign exchange market (Forex, FX, or currency market) is a
global decentralized or over-the-counter (OTC) market for the trading of currencies.
This market determines foreign exchange rates for every currency. It includes all aspects
of buying, selling and exchanging currencies at current or determined prices.
14. Put Feature: A put option on a bond is a provision that allows the holder of the bond the
right to force the issuer to pay back the principal on the bond. A put option gives
the bond holder the ability to receive the principal of the bond whenever they want before
maturity for whatever reason.
15. Index links gilt bonds : An index-linked bond is a bond in which payment of interest
income on the principal is related to a specific price index, usually the Consumer Price
Index (CPI). This feature provides protection to investors by shielding them from
changes in the underlying index. The bond's cash flows are adjusted to ensure that the
holder of the bond receives a known real rate of return
16. WTO: World Trade Organization (WTO) is the only international organization dealing
with the global rules of trade. Its main function is to ensure that trade flows as smoothly,
predictably and freely as possible.
17. Carrot and stick bonds : Carrot-and-Stick Bond: A variant of the traditional
convertible bond with a low conversion premium to encourage early conversion
(the carrot) and a provision, which allows the issuer to call the bond at a specified
premium if the common stock is trading at a relatively modest percentage above the
conversion price
18. Option bonds : A bond option is an option contract in which the underlying asset is a
bond. Like all standard option contracts, an investor can take many speculative positions
through either bond call or bond put options. In general, all types of options, including
bond options, are derivative products that allow investors to take speculative bets on the
direction of underlying asset prices or to hedge certain asset risks within a portfolio
19. Zero discount bonds : A bond's coupon rate is the percentage of its face value payable
as interest each year. A bond with a coupon rate of zero, therefore, is one that pays no
interest. However, this does not mean the bond yields no profit. Instead, a zero coupon
bond generates a return at maturity.
20. Easy Exit bonds : Easy Exit Bonds are bonds which provides liquidity and easy exit
route to the investor by way of redemption where investors can get ready
21. Mutual funds : A mutual fund is a type of financial vehicle made up of a pool of money
collected from many investors to invest in securities like stocks, bonds, money market
instruments, and other assets
22. Factoring: Factoring is a financial transaction and a type of debtor finance in which a
business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a
discount. A business will sometimes factor its receivable assets to meet its present and
immediate cash needs
23. Capital formation: Capital formation is a term used to describe the net capital
accumulation during an accounting period for a particular country. The term refers to
additions of capital goods, such as equipment, tools, transportation assets, and electricity.
24. GNP: Gross national product (GNP) is an estimate of total value of all the final products
and services turned out in a given period by the means of production owned by a
country's residents. ... Net exports represent the difference between what a country
exports minus any imports of goods and services.
25. SEBI: Securities and Exchange Board of India (SEBI) is a statutory regulatory body
entrusted with the responsibility to regulate the Indian capital markets. It monitors and
regulates the securities market and protects the interests of the investors by enforcing
certain rules and regulations
UNIT II
1 2 3 4 5 6 7 8 9 10
11 12 13 14 15 16 17 18 19 20
21 22 23 24 25
A) Multiple Choice Questions
1 The term Venture capital refers financial investment in a highly risky and growth oriented
venture with the objective of earning a _______________
a. High rate of return b. High rate of risk c. High rate of loss d. None
2. Banker plays a major role if the transfer of asset in a _____of any organization
a. Profits b. venture c. Losses d. Funds
3. Financial Services are classified into___________
a. Organization market b. Capital & Money Markets c. Call Money market d. Call Market
4. Lease is a contract outlining the terms under which one party agrees to rent property
owned by ___________
a. Own Party b. All parties c. another party d. One party
5. Fund based &___________are Traditional Activities
a. Finance based b. Asset Based c. Liability based d.Non-Based activities
6. LOC is Letter of credit Document issued by a _____ party that guarantees payment for
goods
a. Third party b. Second Party c. First Party d. Any party
7. Project advisory service comes under _____activity
a. Traditional b. Fund c. Modern d. None
8. _______is the process of involving a group of lenders in funding various portions of a

loan for a single borrower.
a. Loan syndication b. Loan Process c. Loan Concept d. None
9. ______is a system where all the transactions of the bank are done online and there are no
physical branches of the banks.
a. Online banking b. Human Banking c. Internet banking d. Tele Banking
10. A fee‐based financial service is Lease financing between the ____
a. Lessor and Lessee b. Owner c. Renter d. None

11. The traditional services which comes under ____ activities are Underwriting and
investment
a. Non Fund based fundbased c. Both a and b d. None
12. Purchase of raw materials does not deal with the ______acitivity
a. Financial service b. Financial Sectors c. Banking d. Leased
13. ______is a fund based financial service, provides resources of finance receivable as well
as facilities the collection of receivables.
a. Share b. Debenture c. Factoring d. All the above
14. _______ is a service offered by a stock brokers
a. Stock broking b. Stock issue c. Stock Sale d. None
15. The National Housing Bank (NHB) is an apex level financial institution catering to the
______in the country
a. Finance sector b. Sales Sectors c. Advertising sectors d.housing sector
16. A Non-Banking Financial Company (NBFC) is a company registered under the Act of
________
a. Income Tax Act b. Sales Act c. Companies Act, 1956 d. All the above
17. Financial Services are those organization which take care of the business which have
very high end _____in the society and which helps in innovation
a. Services b. Sector c. Company d. Demand
18. Development bank provide medium and long-term finance to the industrial and
_________sector
a. Service b. Sales c. Agricultural d. All
19. ______is a form of private equity and a type of financing those investors provide to
startup companies and small businesses.
a. Venture capital b. Shares c. Leasing d. Hair purchase
20. ICICI company headquartered in located in _____
a. Hyderabad b. Mumbai c. Goa d. Gujarat

22. There are ____credit rating agencies registered under SEBI
a. Seven b. Four c. Six d. Eight
23. Merchant banks do not provide any basic banking _____
a. Activities b. Services c. Factors d. Payments
24. Fee based financial services are those services wherein financial institutions operate in
specialized fields to earn a substantial income in the form of ____
a. Fee b. dividends c. brokerage on operationsd. All the above
25. Functions of financial services exclude Collection of ______
a. Fee b. Funds c. Tax d. Payments
1. RBI regulates foreign exchange under the ________________
2. A loan is a specified sum of money provided by a lender to a borrower on condition that
it is ____________
3. The main purpose of the capital market is to facilitate the raising of __________.
4. A __________ is a financial instrument that is linked to another specific financial instrument.
5. __________are securities representing a portion of the ownership of a company.
6. Corporate bonds that are not backed by a specific asset are called ___________
7. ______________ funds placed at financial institutions for a specified period or term.

8. Financial system performs the function of administering national, fiscal, and monetary
Policy to ensure the ______________ of the economy.
9. Financial markets provide the holders of _________with a chance to resell or liquidatethese

assets.
10. Long-term growth of financial markets is ensured through giving ________to financial
Institutions to become efficient under competition.
11. The ____________________ is the mechanism through which transactions in the financial
system are cleared and settled.
12. The debt market is also known as the _______________ Market.
13. ________________are mainly used for transaction purposes and for the safekeeping of
funds.
14. Treasury bills are government securities that have a maturity period of up to ________
15. Corporate bonds are medium or long-term securities of __________ companies.
16. Venture capital companies provide the necessary risk capital to the __________ so as to meet
the promoters' contribution as required by the financial institutions.
17. Venture capital financing is a ______________.
18. Venture capital combines the qualities of ________________and entrepreneur in one.

19. A venture capital is not subject to ______________on demand.
20. Venture capitalists perceive low risk in ventures requiring finance for ________________
purpose
D) Concept questions
1. Commercial Banks
2. Two functions of Commercial Banks
3. Venture Capital
4. Merchant Banking
5. Lending
6. Equity
7. Hire Purchase
8. Leasing
9. Start Up
10. Types of Leasing
11. NBFCs
12. Merchant Banker
13. Features of banking
14. Types of issues in Merchant Banking
15. Debentures
16. Functions of Merchant Banking
17. Objectives of Venture Capital
18. Differences of Hire purchase and Leasing

19. Lending Process
20. Installments
21. Payment
22. Shares
23. SEBI
24. BSE
25. NSE
Answers: UNIT II
Multiple choices
1 2 3 4 5 6 7 8 9 10
a b b c d c c a c a
11 12 13 14 15 16 17 18 19 20
b a c a d c d c a
21 22 23 24 25
a c b d c
1. The term Venture capital refers financial investment in a highly risky and growth oriented
venture with the objective of earning a high rate of return. New Ventures are always befilthed to
3 Financial Services are classified into.Capital & Money Markets.Financial Services is a term
4 A Lease is an agreement under which a company has a right make use of Capital Assets.Lease
is a contract outlining the terms under which one party agrees to rent property owned by another
party
5Fund based & Non-Based activities are Traditional Activities .The non fund based financial
capital issue management etc. Fund Based Financial Services(FBFS) are financing method that is
driven by the assets of companies.
6 LOC is Letter of credit Document issued by a third party that guarantees payment for
goods or services once the seller provides acceptable documentation
7. Project advisory service comes under Modern activity. Facilitating transactions

(exchange of goods and services) in the economy. Mobilizing savings (for which the outlets
would otherwise be much more limited). Allocating capital funds (notably to finance productive
investment).
8. Loans Syndication refers to banks joining together for pooling loans. Loan syndication
is the process of involving a group of lenders in funding various portions of a loan for a single
borrower. Loan syndication most often occurs when a borrower requires an amount too large for
a single lender to provide or when the loan is outside the scope of a lender's risk-exposure levels
9. The click and portal model facilitateVirtual banking.Virtual or internet banking is a

system where all the transactions of the bank are done online and there are no physical branches
of the banks. ... Thus, users mostly use virtual banks for many services like- checking the
account balance, transfer funds, bill payments etc
10. A fee‐based financial service is Lease financing A finance lease is a way of providing
finance – effectively a leasing company (the lessor or owner) buys the asset for the user (usually
called the hirer or lessee) and rents it to them for an agreed period
services which come under fund based activities are the following:a) Underwriting of or
important for the organization once the production activity starts. The raw materials are the basic
requirements for the organization
well as facilities the collection of receivables.Factoring is a financial transaction and a type of
14. Stock broking is a service offered by a stock broker i.e. buying and selling or dealing in
shares on behalf of the customers. Stockbroking. the function of buying and selling financial
15. N B H stands for. New housing bank. The National Housing Bank (NHB) is an apex level
16. N.B F C stands for Non-banking finance companies A Non-Banking Financial Company
purchase, insurance
capital fund of I D F I etc. to provide Venture capital. Venture capital is a form of private equity
and a type of financing that investors provide to startup companies and small businesses that are
believed to have long-term growth potential. Venture capital generally comes from well-off
investors, investment banks and any other financial institutions
20. I C I C I:ICICI Bank Limited is an Indian multinational banking and financial services
company headquartered in Mumbai, Maharashtra with its registered office in Vadodara, Gujarat.
As of 2018, ICICI Bank is the second largest bank in India in terms of assets and market
capitalization. Industrial Credit and Investment Corporation of India
21.Lease financing is not a fee‐based financial service A finance lease is a way of providing
finance – effectively a leasing company (the lessor or owner) buys the asset for the user (usually
called the hirer or lessee) and rents it to them for an agreed period. A finance lease is defined in
Statement of Standard Accounting Practice 21 as a lease that transfers.
22 Credit rating agencies as of now, there are six credit rating agencies registered under SEBI
company that provides services like fundraising activities like IPOs, FPOs, loans, underwriting,
financial advising or market making for big companies and individuals having huge net worth
but these merchant banks do not provide the basic banking services such as checking accounts,
etc.
24.Financial intermediaries provide services on the basis of non‐fund activities, also called ‐Fee
based activity. Fee Based Services Fee based financial services are those services wherein
financial institutions operate in specialized fields to earn a substantial income in the form of fees
or dividends or brokerage on operations. Credit cards charge interest and are primarily used for
short-term financing
25. Functions of financial services exclude Collection of tax .Banks earn revenue primarily on
the difference in the interest rates charged for credit accounts and the rates paid to depositors.
Financial services like these primarily earn revenue through fees, commissions, and other
methods like the spread on interest rates between loans and deposits.
1. Foreign Exchange Management Act.
2. repaid
3. long-term funds
4. financial derivative
5. Shares
6. Debentures
7. Term Depositary
8. Stability
9. financial assets
10. autonomy
11. Payment and Settlements
12. Fixed Income Securities
13. Demand Deposits
14. one year
15. Private sector
16. Entrepreneurs
17. Long-term investment
18. banker, stock market investor
19. repayment
20. expansion
Concept based answers
1. Commercial Banks: A commercial bank is a financial institution which performs the

functions of accepting deposits from the general public and giving loans for investment with the
aim of earning profit. They generally finance trade and commerce with short-term loans.
2. Functions of Commercial Banks: The primary functions of a commercial bank are

accepting deposits and also lending funds. Deposits are savings, current, or time deposits. Also, a
commercial bank lends funds to its customers in the form of loans and advances, cash credit,
overdraft and discounting of bills, etc.
3. Venture Capital: Venture capital is a form of private equity and a type of financing that
investors provide to startup companies and small businesses that are believed to have long-term
growth potential. Venture capital generally comes from well-off investors, investment banks and
any other financial institutions.
4. Merchant Banking: A merchant bank is a company that conducts underwriting, loan

services, financial advising, and fundraising services for large corporations and high net worth
individuals. Unlike retail or commercial banks, merchant banks do not provide services to the
general public.
5. Lending: Lending (also known as "financing") in its most general sense is the temporary
giving of money or property to another person with the expectation that it will be repaid. In a
business and financial context, lending includes many different types of commercial loans.
6. Equity: Equity is ownership of an asset of value. In corporate finance, equity (more

commonly referred to as shareholders' equity) refers to the amount of capital contributed by the
owners. Put another way, equity is the difference between a company's total assets and total
liabilities.
7. Hire Purchase: Hire purchase is an arrangement for buying expensive consumer goods,
where the buyer makes an initial down payment and pays the balance plus interest in
installments. The term hire purchase is commonly used in the United Kingdom and it's more
commonly known as an installment plan in the United States
8. Leasing: A lease is a contract outlining the terms under which one party agrees to rent
property owned by another party. It guarantees the lessee, also known as the tenant, use of an
asset and guarantees the lessor, the property owner or landlord, regular payments for a specified
period in exchange
9. Start Up: A startup is a young company founded by one or more entrepreneurs to develop
a unique product or service and bring it to market. By its nature, the typical startup tends to be a
shoestring operation, with initial funding from the founders or their friends and families.
10. Types of Leasing: Financial Lease, Operating Lease, Leveraged and non-leveraged
leases, Sale and leaseback etc.. The two most common types of leases are operating leases and
financing leases (also called capital leases). In order to differentiate between the two, one must
consider how fully the risks and rewards associated with ownership of the asset have been
transferred to the lessee from the lessor.
11. NBFCs: A Non-Banking Financial Company (NBFC) is a company registered under the
Companies Act, 1956 engaged in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by Government or local authority or other
marketable securities of a like nature, leasing, hire-purchase, insurance
12. Merchant Banker: A merchant bank is a company that conducts underwriting, loan
general public
13. Features of banking: Banking refers to the process of money transfers from and between
bank and the clients. Banking involves loans, credit facilities and other financial performances.
Features of Banking. ... Banks main focus is on cash transaction which involves depositing and
withdrawal of cash through various money agents
14. Types of issues Merchant Banking: Merchant banking divisions of commercial banks
have been active in a narrow range of traditional merchant banking services, which mainly
included issue management, underwriting and syndication of loans and provision of advisory
services to corporate clients on fund raising and other financial aspects.
15. Debentures: The definition of a debenture is a long-term bond issued by a company, or an

unsecured loan that a company issues without a pledge of assets. An interest-bearing bond issued
by a power company is an example of a debenture. It is an acknowledgment of debt.
16. Functions of Merchant Banking: Raising Finance for Clients : Merchant Banking helps
its clients to raise finance through issue of shares, debentures, bank loans, etc, Broker in Stock
Exchange : Merchant bankers act as brokers in the stock exchange , Project Management :
Merchant bankers help their clients in the many ways.
17. Objectives of Venture Capital: Venture capitalists finance innovation and ideas which
have potential for high growth but with inherent uncertainties. This makes it a high-risk, high
return investment. Apart from finance, venture capitalists provide networking, management and
marketing support as well.
18. Differences of Hire purchase and Leasing: In hire-purchasing, the ownership is

transferred to the hirer only if he pays all the outstanding installments. On the other hand, in a
finance lease, the lessee gets the option to buy the asset at the end of the term by paying a
nominal amount, but in operating lease, there is no such option available to the lessee
19. Lending Process: There are six distinct phases of the mortgage loan process: pre-
approval, house shopping; mortgage application; loan processing; underwriting and closing.
20. Installments: A series of payments that a buyer makes instead of a lump sum to
compensate the seller. Installment payments often, but do not always, include interest to pay the
seller for accepting the credit risk that the buyer will not make payments in a timely manner.
Installment payments can have tax advantages for the seller
21. Payment: A payment is the voluntary tender of money or its equivalent or of things of
value by one party (such as a person or company) to another in exchange for goods, or services
provided by them, or to fulfill a legal obligation. The party making a payment is commonly
called the payer, while the payee is the party receiving the payment
22. Shares: Shares are units of ownership interest in a corporation or financial asset that
provide for an equal distribution in any profits, if any are declared, in the form of dividends. The
two main types of shares are common shares and preferred shares.
entrusted with the responsibility to regulate the Indian capital markets. It monitors and regulates
the securities market and protects the interests of the investors by enforcing certain rules and
regulations.
24. BSE: The Bombay Stock Exchange (BSE) is Asia's oldest stock exchange. Based in
Mumbai, India, BSE was established in 1875 as the Native Share & Stock Brokers' Association.
Prior to that brokers and traders would gather under banyan trees to conduct transactions. Shares
of more than 5,000 companies are traded on BSE.
25. NSE: The National Stock Exchange (NSE) is a stock exchange in India. Set up in
November 1992, NSE was India's first fully automated electronic exchange with a nationwide
presence.
Unit III
1 2 3 4 5 6 7 8 9 10
11 12 13 14 15 16 17 18 19 20
21 22 23 24 25
MCQs
1. In hire purchase system, each installment is treated as ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ till the last installment is
paid.
(a) Interest (b) Hire charge (c) payment (d) Credit.
2. The features of hire purchase:

(a)The possession of goods is given to the buyer immediately.
(b) The ownership in the goods remains with the vendor till the last installment is paid.
(c) The seller can repossess the goods in case of default in payment.
(d) All of these
3. Hire purchase is different from
a. Credit sale b. Purchase c. Installment sale d. Loss goods
4. Each installment is treated as
a. Hire charge b. Forfeit amt. C. Recovering charge d. Buyer charges
5. Hire purchase Act
a. 1984 b. 1865 c. 2003 d. 1972
6. Leasing is an arrangement between
a. One party b. Four parties c .two parties d. No parties
7. The lessee enters into agreement with
a. Lessor b. Lessee c. Association d. Agreement
8. Operating lease is also called as
a. Agreement b. Payment c. Service lease d. High lease
9. Payment is to be made in installment over a
a. Specified time b. Legally period c. Hire period d. Payment period

10. Leasing is an alternative to purchase that's used for
a) Houses b) automobiles c) light trucks d) All the above
11. The relationship between the tenant and the landlord is called
a) Tenancy b) lease c) lessor d) All the above
12. Financial leasing is a
a) Short term lease b) long term lease c) fixed term lease d) a and b
13. Leasing covers the full cost of the equipment used in the business by providing ___% of
finance
a)100% b)50% c) 75% d) 90%
14. Lease across National frontiers are called
a) Net and non net lease b) international lease c) cross border lease d) Tax oriented lease.
15. Evaluation of lease decision are as follows
a) present value method b) cost of capital method c) bower -her ringer- Williamson method
d) All the above
16.Leasing is an arrangement between
a. One party b. Four parties c .two parties d. No parties
17.The lessee enters into agreement with

a. Lessor b. Lessee c. Association d. Agreement
18. Operating lease is also called as
a. Agreement b. Payment c. Service lease d. High lease
19.In installment sales , the buyers has right of repossession
a. True b. False c. Directly d. None
20. The hirer has the option to terminate the agreement before the property passes on to him
a. True b. False c. Directly d. None
21. Each installment is treated as
a. Leasing b. Possession c. Hire charges d. Installment
22. Hire Purchase Act is in the year
a. 1972 b. 1984 c.1983 d.2002
23. Hire Purchase is different from
a. Agreement b. Credit sale c. Installment sale d. All the above
24. Credit installment is extended over how many years
a.3yrs b.4yrsc.8yrs d.10yrs
25. In hire purchase, depreciation can be claimed by the
a. Owner b. Hirer c. Customers d. Monitors
B) Fill in the blanks
1. Leasing is a process by which a firm can obtain the use of a certain ____________________
2. The __________________ of the asset is a specialist of the assets which he is leasing out.
3. Commercial paper is an _____________ note with effective maturity.
4. LIBOR_________________________
5. _______________ is a method of financing of the fixed asset to be purchased on future date.
6. ____________________ is system of purchase and sale of goods in which title of goods is

immediately transferred to the purchaser
7. Hire-purchase system is a special system of _______________ of goods.
8. The __________________ has a right to use the goods immediately after delivered.
9. Hire-purchase is a ______________________
10. The hire-purchase has a right to use the goods as a ____________________
11. The hire-purchase has a right ______________ the agreement at any time in the capacity of a
hirer.
12. The hire-purchase becomes the owner of the goods after the payment of ____________ as
per the agreement
13. A __________ is a contractual arrangement calling for the lessee (user) to pay the lessor
(owner) for use of an asset.
14. Lease agreement is a contract between two parties, _________________
15. The term _____________ is also sometimes used to describe a periodic lease agreement
16. The lease will either provide specific provisions regarding ____________ of the lessee and
lessor.
17. A fixed-term tenancy or tenancy for years lasts for _________________ of time.
18. The term of the lease may be ___________________duration.
19. Rent is a requirement of leases in some ________________, but not in civil law jurisdictions.
20. A rental agreement is often called a lease, especially when ______________ is rented.
c) Concept based questions
1. Leasing
2. Steps in Leasing
3. Financial Lease
4. Operating Lease
5. Leverage Lease
6. Sale and Lease back
7. Cross border lease
8. Wet lease and dry lease
9. Vendor leasing
10. Two advantages of lease
11. Two disadvantages of Lease
12. Hire Purchase
13. Agreement
14. Credit Sale
15. Installment sale
16. Salvage value
17. Deposit
18. Tax benefit of lease
19. Bank credit

20. Repayment
21. Installments
22. Loan
23. Legal Position
24. Lessee
25. Lessor
Answers:
1 2 3 4 5 6 7 8 9 10
b d c a d c a c a d
11 12 13 14 15 16 17 18 19 20
a b a c d c a c b a
21 22 23 24 25
c a d a b
Multiple choice question answers explanation
1. In hire purchase system, each installment is treated as Hire charge till the last installment
is paid. the amount of money it costs to hire something, such as a bike, car, etc.
2. The features of hire purchase:
(a)The possession of goods is given to the buyer immediately.
(b) The ownership in the goods remains with the vendor till the last installment is paid.
(c) The seller can repossess the goods in case of default in payment.
3. Hire purchase is different from Installment sale. Installment Sale. As a method of sale, it
allows for the partial deferral of any capital gain to future taxation years. Installment sales
require the buyer to make regular payments, or installments, on an annual basis, plus interest if
installment payments are to be made in subsequent taxation years
4. Each installment is treated as Hire charge the amount of money it costs to hire something.
5. Hire purchase Act 1972Hire purchase is an arrangement for buying expensive consumer
goods, where the buyer makes an initial down payment and pays the balance plus interest in
6. Leasing is an arrangement between two parties. Lessor and Lessee are the two parties involved
in the leasing activity
7. The lessee enters into agreement with Lessor. Leasing is an arrangement between two parties.
Lessor and Lessee are the two parties involved in the leasing activity
8. Operating lease is also called as Service lease An operating lease is a short-term lease or
contract in which the lessee agrees to rent an asset from the lessor and the lessor retains the rights
of ownership. In other words, an operating lease is a lease that is less than one year in length and
the lessor always maintain ownership of the leased asset.
9. Payment is to be made in installment over a Specified time .A sum of money paid in small
parts in a fixed period of time. a single payment within a staged payment plan of a loan or a hire
purchase (installment plan).
10. Leasing is an alternative to purchase that's used for houses, automobiles, light trucks etc
A lease is a contract outlining the terms under which one party agrees to rent property owned by
another party. It guarantees the lessee, also known as the tenant, use of an asset and guarantees
the lessor, the property owner or landlord, regular payments for a specified period in exchange
11.The relationship between the tenant and the landlord is called Tenancy. A contract by which
the owner of real property (the landlord), grants exclusive possession of that real property to
another person (tenant), in exchange for the tenant's periodic payment of some sum of money
(rent)
12.Financial leasing is a long term lease.
A finance lease is a method of financing assets where they remain the property of the finance
company that hires them and the lessee pays for the hire of the asset or assets. ... Using a finance
lease means that the asset will appear on the lessee's balance sheet, with outstanding rentals
represented as a liability.
13. Leasing covers the full cost of the equipment used in the business by providing 100% of
finance As a means of financing, loans and leases have benefits and drawbacks. We list ... Lease:
Up to 100% financing is available including soft costs and sales tax.100% Financing. With
leasing, there is very little money down - perhaps only the first and last month's payment are due
at the time of the lease.
14.Lease across National frontiers are called cross border lease.Cross-border leasing is a leasing
arrangement where lessor and lessee are situated in different countries.
A major objective of cross-border leases is to reduce the overall cost of financing through
utilization of tax depreciation.
15. Evaluation of lease decision are as follows
a) present value method : present value (PV), also known as present discounted value, is the
value of an expected income stream determined as of the date of valuation
b) cost of capital method : The cost of capital is expressed as a percentage and it is often used to
compute the net present value of the cash flows in a proposed investment
c) bower -her ringer- Williamson method
16.Leasing is an arrangement between two parties. . Leasing is an arrangement between two

parties. Lessor and Lessee are the two parties involved in the leasing activity
17.The lessee enters into agreement withLessor. Leasing is an arrangement between two parties.
Lessor and Lessee are the two parties involved in the leasing activity
18. Operating lease is also called as . Service lease An operating lease is a short-term lease or
contract in which the lessee agrees to rent an asset from the lessor and the lessor retains the rights
of ownership. In other words, an operating lease is a lease that is less than one year in length and
the lessor always maintain ownership of the leased asset.
19.In instalment sales, As a method of sale, it allows for the partial deferral of any capital gain to
future taxation years. Installment sales require the buyer to make regular payments, or
installments, on an annual basis, plus interest if installment payments are to be made in
subsequent taxation years
20. The hirer has the option to terminate the agreement before the property passes on to hima
person or company that buys something using hire purchase: Under a hire purchase agreement,
as soon as the hirer pays off all money due
21. Each installment is treated as Hire charges Installment Sale. ... As a method of sale, it allows
for the partial deferral of any capital gain to future taxation years. Installment sales require the
buyer to make regular payments, or installments, on an annual basis, plus interest if installment
payments are to be made in subsequent taxation years
22. Hire Purchase Act is in the year.1983 Hire purchase in commercial law is an agreement
where the owner of any goods can permit a person, or the hirer, to hire goods from him or her for
a certain period of time. ... The hirer has the option to buy the goods at the end of the agreement
if all installments have been paid to the owner
23. Hire Purchase Hire purchase is an agreement whereby a person hires goods for a period of
time by paying installments, and can own the goods at the end of the agreement if all
installments are paid. Hire purchase agreements usually last between 2 and 5 years, the most
common last 3 years.
24. Credit installment is extended over 3yrs.Installment credit is a loan for a fixed amount of
money. The borrower agrees to make a set number of monthly payments at a specific dollar
amount. An installment credit loan can have a repayment period lasting from months to years
until the loan is paid off.
25. In hire purchase, depreciation can be claimed by the .Hirer.he lessee, correspondingly, will
not claim any depreciation and will be entitled to expense off the rentals. If the transaction is a
hire-purchase or conditional sale transaction, the hirer will be allowed to claim depreciation.
1. fixed assets
2. lesser or the owner
3. unsecured promissory
4. London Interbank Offered Rate
5. Hire purchase
6. Installment Payment System
7. purchase and sale
8. purchase
9. credit purchase
10. bailer
11. to terminate
12. all installments
13. A lease
14. the lessor and the lessee
15. rental agreement

16. the responsibilities and rights
17. some fixed period
18. fixed, periodic or of indefinite
19. common law jurisdictions
20. real estate
period in exchange
2. Steps in Leasing: The first step in the leasing process is to determine your list of
requirements. Second step is to enter into lease agreement. Last is regarding payment process.
3. Financial Lease: finance lease is a way of providing finance – effectively a leasing

company (the lessor or owner) buys the asset for the user (usually called the hirer or lessee) and
rents it to them for an agreed period. A finance lease is defined in Statement of Standard
Accounting Practice 21 as a lease that transfers.
4. Operating Lease: An operating lease is a contract that allows for the use of an asset but
does not convey ownership rights of the asset. Operating leases are considered a form of off-
balance-sheet financing—meaning a leased asset and associated liabilities (i.e. future rent
payments) are not included on a company's balance sheet.
5. Leverage Lease: A leveraged lease or leased lender is a lease in which the lessor puts up
some of the money required to purchase the asset and borrows the rest from a lender. The lender
is given a senior secured interest on the asset and an assignment of the lease and lease payments.
6.Sale and Lease back: In sale-leaseback agreements, an asset that is previously owned by the
seller is sold to someone else and then leased back to the first owner for a long duration. In this
way, a business owner can continue to use a vital asset but ceases to own it.
7.Cross border lease: Cross-border leasing is a leasing arrangement where lessor and lessee are
situated in different countries. This presents significant additional issues related to tax avoidance
and tax shelters.
8.Wet lease and dry lease: A wet lease of equipment means the organization or person who owns
the equipment will provide it with complete support of manpower to one who needs. A dry lease
saves the expenses of equipment owner which required for training the personnel and to maintain
the equipment.
9.Vendor leasing: A Vendor leasing is one where the retail vendor tie-up with the lease finance
companies which give financing option to the customers of the vendors to purchase a product.
This type of lease is popular in auto finance.
10.Two advantages of lease: Permit alternative use of funds, Faster and cheaper credit
11.Two disadvantages of Lease: It is not suitable mode of project finance, Certain tax benefits .
12.Hire Purchase: Hire purchase is an arrangement for buying expensive consumer goods, where
the buyer makes an initial down payment and pays the balance plus interest in installments
13.Agreement: The definition of agreement means the act of coming to a mutual decision,
position or arrangement. An example of an agreement is the decision between two people to
share the rent in an apartment.
14.Credit Sale: Credit sales are purchases made by customers for which payment is delayed.
Delayed payments allow customers to generate cash with the purchased goods, which is then
used to pay back the seller. Thus, a reasonable payment delay allows customers to make
additional purchases.
15.Installment sale: To qualify as an installment sale: the seller sells property to a buyer where
the seller receives at least one payment in a year after the year of sale. Taxpayers can elect not to
use the installment sale method by including all the gains in income in the year of the sale.
16.Salvage value: Salvage value is the estimated book value of an asset after depreciation is
complete, based on what a company expects to receive in exchange for the asset at the end of its
useful life. As such, an asset's estimated salvage value is an important component in the
calculation of a depreciation schedule.
17.Deposit: The word deposit means to place something somewhere. As a financial term, a
deposit is money you've placed at the bank for safekeeping; to deposit money, you put it into the
bank.
18.Tax benefit of lease: The entire lease rentals will be taxed as income of the lessor. The lessee,
correspondingly, will not claim any depreciation and will be entitled to expense off the rentals. If
the transaction is a hire-purchase or conditional sale transaction, the hirer will be allowed to
claim depreciation.
19.Bank credit: Bank credit is the total amount of funds a person or business can borrow from a
financial institution. Credit approval is determined by a borrower's credit rating, income,
collateral, assets, and pre-existing debt. There are two types of bank credit, secured and
unsecured
20.Repayment: Repayment is the act of paying back money previously borrowed from a lender.
Typically, the return of funds happens through periodic payments which include both principal
and interest. Loans can usually also be fully paid in a lump sum at any time, though some
contracts may include an early repayment fee
21.Installments: A series of payments that a buyer makes instead of a lump sum to compensate
the seller. Installment payments often, but do not always, include interest to pay the seller for
accepting the credit risk that the buyer will not make payments in a timely manner. Installment
payments can have tax advantages for the seller.
22.Loan: A loan is a type of debt. The borrower needs to repay the lender the sum of money
loaned part by part over time in order to clear the debt. Acting as a provider of loans is one of the
main tasks for financial institutions.
23.Legal Position: Legal status is the position held by something or someone with regard to law.
It is a set of privileges, obligations, powers or restrictions that a person or thing has which are
encompassed in or declared by legislation.
24.Lessee: A contract by which one party conveys land, property, services, etc. to another for a
specified time, usually in return for a periodic payment. A person who holds the lease of a
property; a tenant is the lessee.
25.Lessor: A contract by which one party conveys land, property, services, etc. to another for a
specified time, usually in return for a periodic payment. A person who leases or lets a property to
another; a landlord or the owner is called a lessor.
Unit IV
MCQs
1 2 3 4 5 6 7 8 9 10
11 12 13 14 15 16 17 18 19 20
21 22 23 24 25
A) Multiple Choice Questions
1 The term Venture capital refers financial investment in a highly risky and growth oriented
venture with the objective of earning a _______________
a. High rate of return b. High rate of risk c. High rate of loss d. None
2. Banker plays a major role if the transfer of asset in a _____of any organization
a. Profits b. venture c. Losses d. Funds
3. Financial Services are classified into___________
a. Organization market b. Capital & Money Markets c. Call Money market d. Call Market
4. Lease is a contract outlining the terms under which one party agrees to rent property
owned by ___________
a. Own Party b. All parties c. another party d. One party
5. Fund based &___________are Traditional Activities
a. Finance based b. Asset Based c. Liability based d.Non-Based activities
6. LOC is Letter of credit Document issued by a _____ party that guarantees payment for
goods
a. Third party b. Second Party c. First Party d. Any party
7. Project advisory service comes under _____activity
a. Traditional b. Fund c. Modern d. None
8. _______is the process of involving a group of lenders in funding various portions of a

loan for a single borrower.
a. Loan syndication b. Loan Process c. Loan Concept d. None
9. ______is a system where all the transactions of the bank are done online and there are no
physical branches of the banks.
a. Online banking b. Human Banking c. Internet banking d. Tele Banking
11. The traditional services which comes under ____ activities are Underwriting and
investment
a. Non Fund based fundbased c. Both a and b d. None
12. Purchase of raw materials does not deal with the ______acitivity
a. Financial service b. Financial Sectors c. Banking d. Leased
13. ______is a fund based financial service, provides resources of finance receivable as well
as facilities the collection of receivables.
a. Share b. Debenture c. Factoring d. All the above
14. _______ is a service offered by a stock brokers
a. Stock brokingb. Stock issue c. Stock Sale d. None
15. The National Housing Bank (NHB) is an apex level financial institution catering to the
______in the country
a. Finance sector b. Sales Sectors c. Advertising sectors d.housing sector
16. A Non-Banking Financial Company (NBFC) is a company registered under the Act of
________
a. Income Tax Act b. Sales Act c. Companies Act, 1956 d. All the above
17. Financial Services are those organization which take care of the business which have
very high end _____in the society and which helps in innovation
a. Services b. Sector c. Company d. Demand
18. Development bank provide medium and long-term finance to the industrial and
_________sector
a. Service b. Sales c. Agricultural d. All

19. ______is a form of private equity and a type of financing those investors provide to
startup companies and small businesses.
a. Venture capital b. Shares c. Leasing d. Hair purchase
20. ICICI company headquartered in located in _____
a. Hyderabad b.Mumbai c. Goa d. Gujarat
22. There are ____credit rating agencies registered under SEBI
a. Seven b. Four c. Six d. Eight
23. Merchant banks do not provide any basic banking _____
a. Activities b. Services c. Factors d. Payments
24. Fee based financial services are those services wherein financial institutions operate in
specialized fields to earn a substantial income in the form of ____
a. Fee b. dividends c. brokerage on operationsd. All the above
25. Functions of financial services exclude Collection of ______
a. Fee b. Funds c. Tax d. Payments
1. RBI regulates foreign exchange under the ________________
2. A loan is a specified sum of money provided by a lender to a borrower on condition that
it is ____________
3. The main purpose of the capital market is to facilitate the raising of __________.
4. A __________ is a financial instrument that is linked to another specific financial instrument.

5. __________are securities representing a portion of the ownership of a company.
6. Corporate bonds that are not backed by a specific asset are called ___________
7. ______________ funds placed at financial institutions for a specified period or term.
8. Financial system performs the function of administering national, fiscal, and monetary
Policy to ensure the ______________ of the economy.
9. Financial markets provide the holders of _________with a chance to resell or liquidate these
assets.
10. Long-term growth of financial markets is ensured through giving ________to financial
Institutions to become efficient under competition.
11. The ____________________ is the mechanism through which transactions in the financial
system are cleared and settled.
12. The debt market is also known as the _______________ Market.
13. ________________are mainly used for transaction purposes and for the safekeeping of
funds.
14. Treasury bills are government securities that have a maturity period of up to ________
15. Corporate bonds are medium or long-term securities of __________ companies.

16. Venture capital companies provide the necessary risk capital to the __________ so as to meet
the promoters' contribution as required by the financial institutions.
17. Venture capital financing is a ______________.
18. Venture capital combines the qualities of ________________and entrepreneur in one.
19. A venture capital is not subject to ______________on demand.
20. Venture capitalists perceive low risk in ventures requiring finance for ________________
purpose
D) Concept questions
1. Commercial Banks
2. Two functions of Commercial Banks
3. Venture Capital
4. Merchant Banking
5. Lending
6. Equity
7. Hire Purchase
8. Leasing
9. Start Up
10. Types of Leasing
11. NBFCs
12. Merchant Banker
13. Features of banking

14. Types of issues in Merchant Banking
15. Debentures
16. Functions of Merchant Banking
17. Objectives of Venture Capital
18. Differences of Hire purchase and Leasing
19. Lending Process
20. Installments
21. Payment
22. Shares
23. SEBI
24. BSE
25. NSE
Answers:
Answers: UNIT IV
Multiple choices
1 2 3 4 5 6 7 8 9 10
a b b c d c c a c a
11 12 13 14 15 16 17 18 19 20
b a c a d c d c a
21 22 23 24 25
a c b d c

1. The term Venture capital refers financial investment in a highly risky and growth oriented
venture with the objective of earning a high rate of return. New Ventures are always befilthed to
3 Financial Services are classified into. Capital & Money Markets .Financial Services is a term
4 A Lease is an agreement under which a company has a right make use of Capital Assets.
Lease is a contract outlining the terms under which one party agrees to rent property owned by
another party
5Fund based & Non-Based activities are Traditional Activities .The non fund based financial
capital issue management etc. Fund Based Financial Services(FBFS) are financing method that
is driven by the assets of companies.
7 LOC is Letter of credit Document issued by a third party that guarantees payment for goods
or services once the seller provides acceptable documentation
10. Project advisory service comes under Modern activity. Facilitating transactions (exchange
of goods and services) in the economy. Mobilizing savings (for which the outlets would
otherwise be much more limited). Allocating capital funds (notably
to finance productive investment).
11. Loans Syndication refers to banks joining together for pooling loans. Loan syndication is
the process of involving a group of lenders in funding various portions of a loan for a single
borrower. Loan syndication most often occurs when a borrower requires an amount too
large for a single lender to provide or when the loan is outside the scope of a lender's risk-
exposure levels
12. The click and portal model facilitateVirtual banking.Virtual or internet banking is
a system where all the transactions of the bank are done online and there are no physical
branches of the banks. ... Thus, users mostly use virtual banks for many services like-
checking the account balance, transfer funds, bill payments etc
10. A fee‐based financial service is Lease financing A finance lease is a way of

user (usually called the hirer or lessee) and rents it to them for an agreed period
services which come under fund based activities are the following:a) Underwriting of or
important for the organization once the production activity starts. The raw materials are
the basic requirements for the organization
well as facilities the collection of receivables.Factoring is a financial transaction and a type of
14. Stock broking is a service offered by a stock broker i.e. buying and selling or dealing in
shares on behalf of the customers. Stockbroking. the function of buying and selling financial
15. N B H stands for. New housing bank. The National Housing Bank (NHB) is an apex level
16. N.B F C stands for Non-banking finance companies A Non-Banking Financial Company
purchase, insurance
capital fund of I D F I etc. to provide Venture capital. Venture capital is a form of private
equity and a type of financing that investors provide to startup companies and small
businesses that are believed to have long-term growth potential. Venture capital generally
comes from well-off investors, investment banks and any other financial institutions
20. I C I C I:ICICI Bank Limited is an Indian multinational banking and financial
services company headquartered in Mumbai, Maharashtra with its registered office
in Vadodara, Gujarat. As of 2018, ICICI Bank is the second largest bank in India in terms of
assets and market capitalization. Industrial Credit and Investment Corporation of India
21.Lease financing is not a fee‐based financial service A finance lease is a way of

user (usually called the hirer or lessee) and rents it to them for an agreed period. A finance
lease is defined in Statement of Standard Accounting Practice 21 as a lease that transfers.
.
22 Credit rating agencies as of now, there are six credit rating agencies registered under SEBI
company that provides services like fundraising activities like IPOs, FPOs, loans,
underwriting, financial advising or market making for big companies and individuals having
huge net worth but these merchant banks do not provide the basic banking services such as
checking accounts, etc.
24.Financial intermediaries provide services on the basis of non‐fund activities, also called ‐Fee
based activity. Fee Based Services Fee based financial services are those services wherein
financial institutions operate in specialized fields to earn a substantial income in the form
of fees or dividends or brokerage onoperations. Credit cards charge interest and are primarily
used for short-term financing
25. Functions of financial services exclude Collection of tax.Banks earn revenue primarily on
the difference in the interest rates charged for credit accounts and the rates paid to
depositors. Financial services like these primarily earn revenue through fees, commissions, and
other methods like the spread on interest rates between loans and deposits.
1. Foreign Exchange Management Act.

2. repaid
3. long-term funds
4. financial derivative
5. Shares
6. Debentures
7. Term Depositary
8. Stability
9. financial assets
10. autonomy
11. Payment and Settlements
12. Fixed Income Securities
13. Demand Deposits
14. one year
15. Private sector
16. Entrepreneurs
17. Long-term investment
18. banker, stock market investor
19. repayment
20. expansion
1. Commercial Banks: A commercial bank is a financial institution which performs the

functions of accepting deposits from the general public and giving loans for investment with the
aim of earning profit. They generally finance trade and commerce with short-term loans.
2. Functions of Commercial Banks: The primary functions of a commercial bank are
accepting deposits and also lending funds. Deposits are savings, current, or time deposits. Also, a
commercial bank lends funds to its customers in the form of loans and advances, cash credit,
overdraft and discounting of bills, etc.
any other financial institutions.
4. Merchant Banking: A merchant bank is a company that conducts underwriting, loan
general public.
5. Lending: Lending (also known as "financing") in its most general sense is the temporary
giving of money or property to another person with the expectation that it will be repaid. In a
business and financial context, lending includes many different types of commercial loans.
6. Equity: Equity is ownership of an asset of value. In corporate finance, equity (more
commonly referred to as shareholders' equity) refers to the amount of capital contributed by the
owners. Put another way, equity is the difference between a company's total assets and total
liabilities.
7. Hire Purchase: Hire purchase is an arrangement for buying expensive consumer goods,
where the buyer makes an initial down payment and pays the balance plus interest in
period in exchange
9. Start Up: A startup is a young company founded by one or more entrepreneurs to develop
a unique product or service and bring it to market. By its nature, the typical startup tends to be a
shoestring operation, with initial funding from the founders or their friends and families.
10. Types of Leasing: Financial Lease, Operating Lease, Leveraged and non-leveraged
leases, Sale and leaseback etc.. The two most common types of leases are operating leases and
financing leases (also called capital leases). In order to differentiate between the two, one must
consider how fully the risks and rewards associated with ownership of the asset have been
transferred to the lessee from the lessor.
11. NBFCs: A Non-Banking Financial Company (NBFC) is a company registered under the
Companies Act, 1956 engaged in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by Government or local authority or other
marketable securities of a like nature, leasing, hire-purchase, insurance
12. Merchant Banker: A merchant bank is a company that conducts underwriting, loan
general public
13. Features of banking: Banking refers to the process of money transfers from and between
bank and the clients. Banking involves loans, credit facilities and other financial performances.
Features of Banking. ... Banks main focus is on cash transaction which involves depositing and
withdrawal of cash through various money agents
14. Types of issues Merchant Banking: Merchant banking divisions of commercial banks
have been active in a narrow range of traditional merchant banking services, which mainly
included issue management, underwriting and syndication of loans and provision of advisory
services to corporate clients on fund raising and other financial aspects.
15. Debentures: The definition of a debenture is a long-term bond issued by a company, or an
unsecured loan that a company issues without a pledge of assets. An interest-bearing bond issued
by a power company is an example of a debenture. It is an acknowledgment of debt.
16. Functions of Merchant Banking: Raising Finance for Clients : Merchant Banking helps
its clients to raise finance through issue of shares, debentures, bank loans, etc, Broker in Stock
Exchange : Merchant bankers act as brokers in the stock exchange , Project Management :
Merchant bankers help their clients in the many ways.
17. Objectives of Venture Capital: Venture capitalists finance innovation and ideas which
have potential for high growth but with inherent uncertainties. This makes it a high-risk, high
return investment. Apart from finance, venture capitalists provide networking, management and
marketing support as well.
18. Differences of Hire purchase and Leasing: In hire-purchasing, the ownership is
transferred to the hirer only if he pays all the outstanding installments. On the other hand, in a
finance lease, the lessee gets the option to buy the asset at the end of the term by paying a
nominal amount, but in operating lease, there is no such option available to the lessee
19. Lending Process: There are six distinct phases of the mortgage loan process: pre-
approval, house shopping; mortgage application; loan processing; underwriting and closing.
20. Installments: A series of payments that a buyer makes instead of a lump sum to
compensate the seller. Installment payments often, but do not always, include interest to pay the
seller for accepting the credit risk that the buyer will not make payments in a timely manner.
Installment payments can have tax advantages for the seller
21. Payment: A payment is the voluntary tender of money or its equivalent or of things of
value by one party (such as a person or company) to another in exchange for goods, or services
provided by them, or to fulfill a legal obligation. The party making a payment is commonly
called the payer, while the payee is the party receiving the payment
22. Shares: Shares are units of ownership interest in a corporation or financial asset that
provide for an equal distribution in any profits, if any are declared, in the form of dividends. The
two main types of shares are common shares and preferred shares.
regulations.
24. BSE: The Bombay Stock Exchange (BSE) is Asia's oldest stock exchange. Based in
Mumbai, India, BSE was established in 1875 as the Native Share & Stock Brokers' Association.
Prior to that brokers and traders would gather under banyan trees to conduct transactions. Shares
of more than 5,000 companies are traded on BSE.
25. NSE: The National Stock Exchange (NSE) is a stock exchange in India. Set up in
November 1992, NSE was India's first fully automated electronic exchange with a nationwide
presence.
Unit V
MCQs
1 2 3 4 5 6 7 8 9 10
11 12 13 14 15 16 17 18 19 20
21 22 23 24 25
1. Securities and Exchange Board of India (SEBI) was first established in 1988 as a
__________for regulating the securities market.
a. Statutory Body b.non-statutory body c.Organizational body d.Credit worthiness
2. SEBI Chairman is nominated by the _________of India.
a. Union Government b. State Government c. Both a and b d. None
3. Functions of SEBI are to protect the interest of the _______ and development of
securities in the market and to regulate the business in stock exchange.
a. Organization b. Firm c. Investor d. None
4. SEBI promote and regulate self-regulatory organizations and prohibit ________relating
to securities markets
a. Fraudulent and unfair trade practices b. All trades c. only financial trade d. Markets
5. SEBI prohibit _______in securities and regulates substantial acquisition of shares and
takeover of companies
a. Outsider trader b. Broking c. Mediators d. insider trading
6. SEBI register and regulate the working of _________
a. Underwriters b. Promoters c. Banks d. Financial institutions
7. The Securities and Exchange Board of India (SEBI) was established on ______
a. March 30 1984 b Dec 4 1982 c April 12, 1992 d. Oct 1 2011
8. The head Office of SEBI is situated at ____________
a. Delhi b. Hyderabad c. Madras d. Mumbai
9. Securities and Exchange Board of India (SEBI), is a statutory regulatory body established
by an Act of _______________
a. State Govt b. Assembly c.Parliament d. None
10. SEBI was established in 1988 and given Statutory Powers on _________
a. Dec 4th 1983 b. March 30 1984 c. 30 January 1992 d. None
11. In the primary market, companies sell ________to the public for the first time
a. New stocks and bonds b. Old stocks and bonds c. All securities d. None
12. The key function of the primary market is to facilitate capital growth by enabling
individuals to convert ________into _________
a. Stocks and Bonds b. Saving and Investments c. Shares and Debentures d. All the above
13. Whenever a company issues new shares or debentures, it is known as______
a. Financial Services b.IPO c. Securities d. Shares
14. A stock exchange lists the securities and the corporation raises funds through _____
a. Initial Public Offering (IPO) b. SEBI c. Shares and debentures d. None
15. ______ existing shareholders are offered more shares at a discounted price and on a pro-
rata basis
a.Equity shares b.Debentures c. Rights Issue d. None
16. _______ a corporate issues shares at a price which may or may not be related to the current
market price of the same securities
a. Equity shares b.Debentures c. Rights Issue d. Preferential Allotment
17. Publicly traded companies can issue new shares in what is called a ______ of debt or
stock
a. primary issue b. Secondary issue c. Both a and b d. None
18.The _____ is where investors buy and sell securities they already owned shares
a. Primary Market b. IOPS c. secondary market d. None
19. The major stock exchanges are the most visible example of ______ secondary markets
a. Liquidity b. Current Asset c. Fixed Assets d. Creditworthiness
20. Secondary Markets arethe capital user's preference to be able to use the capital for an
extended period of ________
a. Money b. Assets c. Time d. Credit
21. A bond is a fixed income instrument that represents a loan made by an____to a borrower
a. Borrower b. Income c. investor d.borrower and income
22. Owners of bonds are debtholders, or______, of the issuer.
a. Creditors b. Debtors c. Investors d. None
23. Bond details include the end date when the principal of the loan is due to be paid to the
bond_____
a. Lessor b. Lessee c. Owner d. Rent
24 ________ is the money amount the bond will be worth at maturity
. a. Face value b. Profit c. Dividend d. Interest
25 ________ are the dates on which the bond issuer will make interest payments. Payments can
be made in any interval, but the standard is semiannual payments
a. Bonds b. Shares c. Coupon dates d. Maturity date
B) Fill in the blanks

1. A credit rating for an issuer takes into consideration the issuer's _____________
2. CARE's Credit Rating is an opinion on the relative _____________ of

an issuer to make timely payments on specific debt or related obligations over the life of
the instrument.
3.Credit rating agencies are registered and regulated by the ________________
4. The Board may appoint one or more persons as inspecting officers, to undertake inspection
of the books of account, ____________________ of the credit rating agencies.
5. The order of suspension or cancellation of certificate of registration is published by the

Board in at least _________ daily newspapers.
6. The period of validity of certificate of registration shall be _________Years.
7. A renewal application has to be made not less than ________ months before expiry of
the period of the validity of the certificate.
8. If, after considering an application__________ is of the opinion that a certificate should

not be granted or renewed, as the case may be, it may, after giving the applicant a reasonable
opportunity of being heard, ________t the application.
9. Every credit rating agency has to abide by the __________ contained in the Third Schedule.
10. An applicant whose application for the grant of a certificate has been ___________ shall
not undertake any rating activity.
11. The application for renewal made under sub-regulation is to be accompanied by a

_____________ as specified in the second schedule.
12. The Board may, in order to _____________, issue directions with

regard to the transfer of records.
13. Every credit rating agency has to, during the lifetime of securities rated by it continuously
____________ the rating of such securities.
14. Provided that if owing to ____________, a rating has been based on the best available
information, the credit rating agency shall disclose to the investors the fact that the rating
is so based.
15. Every credit rating agency has to frame appropriate ___________ and systems for
monitoring the trading of securities by its employees in the securities of its clients.
16. The assets which remained doubtful for a period of ________ years required a provision
of 30%.
17 .____________should be written off.
18. Term Loan account will be treated as NPA if interest or installment of principal is in
arrears for any _____________ out of four quarters.
19. A ___________________will be treated as NPA if the account remains out of order for
aperiod of two quarters.
20. With effect from 31st March 2005, a __________________ would be one, which has
remained NPA for a period less than or equal to 12 months.
C) Concept based questions
1. FPO
2. IPO
3. ESOP
4. SEBI
5. Types of Equity
6. Sweat Equity
7. Objectives of SEBI
8. Functions of SEBI
9. Fixed price
10. Prospectus
11. Statement in Lue of Prospectus
12. Public Issue
13. Rights Issue
14. Preferential Allotment
15. Project Counseling
16. Capital counseling
17. Portfolio management
18. Issue Management
19. Credit Syndication
20. Working Capital
21. Venture Capital
22. Lease Finance
23. Fixed Deposit
24. Bill Discounting
25. Acceptance credit
Answers: UNIT V
Multiple choice answers
1 2 3 4 5 6 7 8 9 10
b c c a d a c d c c
11 12 13 14 15 16 17 18 19 20
a b b a c d a c a c
21 22 23 24 25
c a c a c
1. Securities and Exchange Board of India (SEBI) was first established in 1988 as a non-
statutory body for regulating the securities market. It became an autonomous body on 12 April
1992 and was accorded statutory powers with the passing of the SEBI Act 1992 by the Indian
Parliament.
2. The SEBI is managed by its members, which consists of the following
The chairman is nominated by the Union Government of India.Two members, i.e., Officers from
the Union Finance Ministry.One member from the Reserve Bank of India.The remaining five
members are nominated by the Union Government of India, out of them at least three shall be
whole-time members.
3. Functions of SEBI are to Protect the interest of the investors and development of
securities in the marketand to regulate the business in stock exchange.
4. SEBI promote and regulate self-regulatory organizations and prohibit fraudulent and
unfair trade practices relating to securities markets.
5. SEBI prohibit insider trading in securities and regulates substantial acquisition of shares
and takeover of companies
6. SEBI register and regulate the working of stock brokers, sub-brokers, share transfer
agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant
bankers, underwriters, portfolio managers, investment advisers and such other
intermediaries who may be associated with securities markets
7. The Securities and Exchange Board of India (SEBI) was established on April 12, 1992 in
accordance with the provisions of the Securities and Exchange Board of India Act, 1992.
Securities and Exchange Board of India was constituted under the Resolution of the Government
of India on 12th day of April, 1988.
8. The head Office of SEBI is situated at Mumbai. The affairs of SEBI are managed by
various departments and regional offices. It has constituted various committees from time to time
to efficiently manage the working and development of securities market. The current Chairman
of SEBI is Mr Ajay Tyagi. The functions of SEBI include regulation, development and
promotion of securities market in India.
9. Securities and Exchange Board of India (SEBI), is a statutory regulatory body established
by an Act of Parliament, to protect the interests of investors in securities, to promote the
development of and to regulate the securities market. In simple terms, SEBI is the regulatory
body of securities markets.
10. Securities and Exchange Board of India. The Securities and Exchange Board of India
(SEBI) is the regulator of the securities and commodity market in India owned by the
Government of India. It was established in 1988 and given Statutory Powers on 30 January 1992
through the SEBI Act, 1992.
11. The primary market is where securities are created, while the secondary market is where
those securities are traded by investors. In the primary market, companies sell new stocks and
bonds to the public for the first time, such as with an initial public offering (IPO)
12. The key function of the primary market is to facilitate capital growth by enabling
individuals to convert savings into investments. It facilitates companies to issue new stocks to
raise money directly from households for business expansion or to meet financial obligations
13. Main features of the primary market (type of Capital Market) are as follow: (1) It is
related with New Issues: The first important feature of the primary market is that it is related
with the new issues. Whenever a company issues new shares or debentures, it is known as Initial
Public Offer (IPO).
14. Public Issue - a stock exchange lists the securities and the corporation raises funds
through Initial Public Offering (IPO).
15. Rights Issue - existing shareholders are offered more shares at a discounted price and on
a pro-rata basis.
16. Preferential Allotment - a corporate issues shares at a price which may or may not be
related to the current market price of the same securities
17. PO's are not the only way new shares are issued. Publicly traded companies can issue
new shares in what is called a primary issue of debt or stock, which involves the issue by a
corporation of its own debt or new stock directly to institutional investors like pension funds, or
to private investors and shareholders.
18. The secondary market is where investors buy and sell securities they already owned
shares. It is what most people typically think of as the "stock market," though stocks are also sold
on the primary market when they are first issued
19. The secondary market for a variety of assets can vary from loans to stocks, from
fragmented to centralized, and from illiquid to very liquid. The major stock exchanges are the
most visible example of liquid secondary markets - in this case, for stocks of publicly traded
companies
20. Secondary markets mesh the investor's preference for liquidity (i.e., the investor's desire
not to tie up his or her money for a long period of time, in case the investor needs it to deal with
unforeseen circumstances) with the capital user's preference to be able to use the capital for an
extended period of time.
21. A bond is a fixed income instrument that represents a loan made by an investor to a
borrower (typically corporate or governmental). A bond could be thought of as an I.O.U.
between the lender and borrower that includes the details of the loan and its payments.
22. Bonds are used by companies, municipalities, states, and sovereign governments to
finance projects and operations. Owners of bonds are debtholders, or creditors, of the issuer.
23. Bond details include the end date when the principal of the loan is due to be paid to the
bond owner and usually includes the terms for variable or fixed interest payments made by the
borrower.
24. Face value is the money amount the bond will be worth at maturity; it is also the
reference amount the bond issuer uses when calculating interest payments. For example, say an
investor purchases a bond at a premium $1,090 and another investor buys the same bond later
when it is trading at a discount for $980. When the bond matures, both investors will receive the
$1,000 face value of the bond.
25. Coupon dates are the dates on which the bond issuer will make interest payments.
Payments can be made in any interval, but the standard is semiannual payments.

1. Credit worthiness
2. ability, willingness
3. Securities and Exchange Board of India
4. Records. and Documents
5. TWO
6. Three
7. Three
8. SEBI Reject
9. Code of Conduct
10. Rejected
11. Renewal fee
12. protect the interests of the investor
13. Monitor
14. lack of co-operation
15. procedures
16. 1 to 3
17. Loss assets
18. two quarters
19. cash credit or overdraft account
20. sub-standard asset
Concept questions answers:

1. FPO: A follow-on public offering (FPO) is the issuance of shares to investors by a
company listed on a stock exchange. A follow-on offering is an issuance of additional shares
made by a company after an initial public offering (IPO).
2. IPO: Initial public offering is the process by which a private company can go public by
sale of its stocks to general public. After IPO, the company's shares are traded in an open
market. Those shares can be further sold by investors through secondary market trading.
3. ESOP: An ESOP is a kind of employee benefit plan, similar in some ways to a profit-
sharing plan. In an ESOP, a company sets up a trust fund, into which it contributes new shares of
its own stock or cash to buy existing shares. Shares in the trust are allocated to individual
employee accounts. An employee stock ownership plan (ESOP) is an employee benefit plan that
gives workers ownership interest in the company. ESOPs give the sponsoring company, the
selling shareholder, and participants receive various tax benefits, making them qualified plans.
Companies often use ESOPs as a corporate-finance strategy to align the interests of their
employees with those of their shareholders.
regulations.
5. Types of Equity: Common stock, preferred shares, contributed surplus, Retained
earnings, Treasury stock are the types of equity.
6. Sweat Equity: The term sweat equity refers to a person or company's contribution toward
a business venture or other project. Sweat equity is generally not monetary and, in most cases,
comes in the form of physical labor, mental effort, and time.
7. Objectives of SEBI: The main purpose of SEBI is to safeguard the rights and interests of
the investor, reduce malpractices related to the stock exchange, establishing a code of conduct
and promoting the healthy functioning of the stock exchange.
8. Functions of SEBI: To protect the interests of investors in securities market , To promote
the development of securities market, o regulate the business in stock exchanges and any other
securities markets
9. Fixed price: The term fixed price is a phrase used to mean the price of a good or a service
is not subject to bargaining. The term commonly indicates that an external agent, such as a
merchant or the government, has set a price level, which may not be changed for individual
sales.
10. Prospectus: prospectus is a formal document that is required by and filed with the
Securities and Exchange Commission (SEC) that provides details about an investment offering to
the public. A prospectus is filed for offerings of stocks, bonds, and mutual funds. A prospectus is
a regulatory document that gives you a bird's-eye view into the investment you're thinking of
making. It's designed to offer shareholders transparency into the companies that issue stocks and
bonds into the financial markets
11. Statement in Lue of Prospectus: The Statement in Lieu of Prospectus is a document filed
with the Registrar of the Companies ( ROC ) when the company has not issued prospectus to the
public for inviting them to subscribe for shares. The statement must contain the signatures of all
the directors or their agents authorized in writing.
12. Public Issue: A public issue is any issue that is of mutual concern to an organization and
one or more of its stakeholders.
13. Rights Issue: When a company makes a rights issue it allots shares to a shareholder by
virtue of and in proportion to their existing shareholding and the shareholder pays for these
rights. Normally the issue is at a discount to market value. Rights issues can be issued either by
listed or unlisted companies
14. Preferential Allotment: First is through a fresh issue of shares to existing shareholders in
proportion to shares held by them (rights or bonus issues).The third method is by making a bulk
allotment to individuals, companies, venture capitalists or any other person through a fresh issue
of shares. This is known as preferential allotment.
15. Project Counseling: It includes preparation of project reports, deciding upon the financing
pattern, appraising the project relating to its technical, commercial and financial viability. It
includes filling up of application forms for obtaining funds from financial institutions. It is the
service offered by merchant banker
16. Capital counseling: It includes about the decision of investing the capital in proper way
and to use the capital resource in an appropriate structure. This helps the new investor to know
how to use the financial resources in a planning way for better profits.
17. Portfolio management: Portfolio Management is defined as the art and science of making
decisions about the investment mix and policy, matching investments to objectives, asset
allocation for individuals and institutions, and balancing risk against performance
18. Issue Management: Issue management is the process of identifying and resolving issues.
Problems with staff or suppliers, technical failures, material shortages – these might all have a
negative impact on your project.
19. Credit Syndication: Credit syndication services are services rendered by the merchant
bankers in the form of organizing and procuring the financial facilities form financial
institutions, banks, or other lending agencies
20. Working Capital: Working capital, also known as net working capital (NWC), is the
difference between a company's current assets, such as cash, accounts receivable (customers'
unpaid bills) and inventories of raw materials and finished goods, and its current liabilities, such
as accounts payable. Working capital is calculated by using the current ratio, which is current
assets divided by current liabilities
any other financial institutions
22. Lease Finance: Lease financing is a contractual agreement between the owner of the
assets (lessor) and user of the assets (lessee), whereby the owner permits the user to
economically use the asset on the payment of periodical amount which is in the form of lease
rent for a specific period of time
23. Fixed Deposit: A fixed deposit (FD) is a financial instrument provided by banks or
NBFCs which provides investors a higher rate of interest than a regular savings account, until the
given maturity date. It may or may not require the creation of a separate account. The interest
rate varies between 4 and 7.50 percent.
24. Bill Discounting: Bill Discounting is a discount/fee which a bank takes from a seller to
release funds before the credit period ends. Bill Discounting is mostly applicable in scenarios
when a buyer buys goods from the seller and the payment is to be made through letter of credit
25. Acceptance credit: Credit Acceptance offers indirect auto financing. Simply put, this
means that you apply for and secure your financing at the dealership where you purchase the
vehicle, as opposed to a direct auto loan that you get directly from a financial institution, such as
a bank or credit union

FMS QB

Uploaded by

Copyright:

Available Formats

FMS QB

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

FMS QB

Uploaded by

Copyright:

Available Formats

AVINASH DEGREE COLLEGE KUKATPALLY

COURSE : FINANCIAL MARKETS AND PAPER CODE : DSC 501

a. Venture capital b. Merchant banking c. Leasing d. none of these.

a. Trustee b. Agent c. Attorney d. Administrator

3 Financial Services are classified into _______

a. Traditional& modern activities b. Capital& Money Markets c. Both d. None

a. Current Assets b. Fixed Assets c. Tangible Assets d. Capital Assets

5 Fund based & Non-Based activities are _______

a. Line of control b. Loss of capital c. Letter of credit d. None of above

7 Project advisory service comes under ____________

a. Modern activity b. Traditional activity c. Joint venture d. Risk management

8 _________ refers to banks joining together for pooling loans

a. Merchant Banking b. Leasing c. Loans Syndication d .A& B

9 The click and portal model facilitate _________

a. Traditional banking b. Paperless banking c. Virtual banking d .None

10. Which of the following is not a fee‐based financial service?

a. Corporate counseling b. Lease financing c. Profit management d. Issue management.

11 Which of the following is not a fund based financial services.

a. Credit rating agencies b. Venture capital c. Consumer credit d. Factoring.

12 Find out odd one.

a. Leasing b. hedge finance c. Merchant banker d. Factoring.

a. Lease finance b. Venture capital c. Merchant banker d. Stock broking.

15. N B H stands for ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.

16. N.B F C stands for ____________

17. Financial service companies exclude ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.

a. Commercial banks b. Insurance companies c. Sole proprietorship d. Crepitating agencies.

18. Specialized financial institution, are also known as ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.

a. Leasing companies b. U T I c. N B F C s d. Development bank.

a Seed capital b. Venture capital c. Primary fund d. secondary fund.

20. Identify odd one.

21. Which of the following is not a fee‐based financial service?

a. Corporate counseling b. Lease financing c. Profit management d Issue management.

22. Which of the following is not a fund based financial services.

a Credit rating agencies b. Venture capital c. Consumer credit d. Factoring.

23. Find out odd one‐ Authorization criteria of merchant bankers.

25. Functions of financial services exclude ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.

a. Mobilization of savings b. Allocation of fund c. Specialized services d. Collection of

B) Fill In The Blanks

1) Suppliers of Financial Services include the bank and _______________

2) An important goal of financial service industry is to ___________________.

4) Financial services is the product that is traded in _____________________

5) Non banking financial services can be classified as _______________________

6) Commercial banks are classified into primary functions and ____________________

9) __________ is birthplace of modern banking.

10). Merchant banks pay significant role in ___________________.

12) CARE __________________

13) CRISIL _________________________

14) ICRA _______________________________

15) DCR _________________________________

18) Term lending institution are _________________ intermediaries.

19)Two types of Options are ___________________

4. Fund Based activities

5. Non-Fund based activities

10. Convertible bonds

11. Financial engineering.

13. Forex Market

14. Put Feature

15. Index links gilt bonds

17. Carrot and stick bonds

19. Zero discount bonds