1.

State the meaning of financial system

A financial system is a network of financial institutions – such as insurance companies,

stock exchanges, and investment banks – that work together to exchange and transfer
capital from one place to another.

2. Who are the players of financial markets?

Four Key Players in the Primary Market

 Corporations. In the capital markets, corporations behave as operating
businesses that require capital to grow and run their operations. ...
 Institutions (“Buy Side” Fund Managers) ...
 Investment Banks (“Sell Side”) ...
 Public Accounting Firms.
3.Define Merchant Banking?

The term merchant bank refers to a financial institution that conducts underwriting, loan
services, financial advising, and fundraising services for large corporations and high-
net-worth individuals (HWNIs).

4.What do you mean by underwriting?

Underwriting is one of the most important functions in the financial world wherein an
individual or an institution undertakes the risk associated with a venture, an investment,
or a loan in lieu of a premium. Underwriters are found in banking, insurance, and stock
markets. For example, The Mutual Fire Insurance Company of British Columbia
underwrites policies sold by Square One. Many large insurance companies are their own
underwriters.

5. Write down the meaning of factoring?

. Factoring is a financial service in which the business entity sells its bill receivables to a
third party at a discount in order to raise funds. This is a type of business loan. Factoring
differs from invoice discounting.

6.What is factoring and its importance?

For businesses, factoring provides a solution to managing cash flow. Cash flow
is that rate at which money flows into and out of the firm. Waiting months for a
customer to make payment reduces cash flow, which may prevent a business
without ample savings from carrying on its activities and meeting its obligations
7. What do you mean by Consumer Finance?

Consumer finance refers to the borrowing, saving, and. investment choices that people
(i.e., households) make over. time. These financial decisions can be complex and can. affect
financial well-being both now and in the future. The major consumer financial markets
include mortgage lending, student loans, automobile loans, credit cards and
payments, payday loans and other credit alternative financial products, and
checking accounts and substitutes
8.Who is called consumer?

Consumers can be either an individual or group of people who purchase or use goods and
services solely for personal use, and not for manufacturing or resale. They are the end-
users in the sales distribution chain. consumer is a person or a group who intends to order,
orders, or uses purchased goods, products, or services primarily for personal, social, family,
household and similar needs, not directly related to entrepreneurial or business activities.

9. Define Venture capital

Venture capital (VC) 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.

10Expand the terms CRISIL and IRDA.

Credit Rating Information Services of India Limited

CRISIL is a global credit rating agency for financial institutes and financial instruments. The
Credit Rating Information Services of India Limited offers a myriad of financial services. This
rating shows how likely a particular mutual fund is going to deliver the returns on time
and within the policy framework.

Insurance Regulatory and Development Authority of India.

Insurance Regulatory and Development Authority (IRDA) Act, 1999 spells out the Mission of
IRDAI as: “... to protect the interests of the policyholders, to regulate, promote and ensure
orderly growth of the insurance industry and for matters connected therewith or
incidental thereto...

11.Define Insurance.

Insurance is a contract, represented by a policy, in which an individual or entity receives

financial protection or reimbursement against losses from an insurance company. The
company pools clients' risks to make payments more affordable for the insured.

12.What is Hire Purchase?

a hire-purchase contract allows the buyer to hire the goods for a monthly rent. Hire
purchase means a transaction where goods are purchased and sold on the terms that: (i)
Payment will be made in installments, (ii) The possession of the goods is given to the buyer
immediately, (iii) The property (ownership) in the goods remains with the vendor till the last
installment is paid,

13. Give the meaning of leasing.

A lease is a contract outlining the terms under which one party agrees to rent an asset—
in this case, property—owned by another party. It guarantees the lessee, also known as the
tenant, use of the property and guarantees the lessor (the property owner or landlord) regular
payments for a specified period in exchange.
14, What are the financial instruments?

A financial instrument is a real or virtual document representing a legal agreement involving any
kind of monetary value. Financial instruments may be divided into two types: cash instruments
and derivative instruments. Basic financial instruments are defined as one of the
following: cash. a debt instrument (such as accounts receivable and payable) commitment
to receive a loan that satisfy certain criteria. investments in non-convertible preference
shares, and non-puttable ordinary shares.

15. How interest rate is to be determined?

Interest rates are determined, in large part, by central banks who actively commit to
maintaining a target interest rate. They do so by intervening directly in the open market
through open market operations (OMO), buying or selling Treasury securities to influence short
term rates.

16. State any two functions of Underwriters.

The process of underwriting involves four basic functions: 1) selection of risks, 2) classification
and rating, 3) policy forms, and 4) retention and reinsurance. By performing these four functions
the underwriter increases the possibility of securing a safe and profitable distribution of risks.

17. State any two functions of Underwriters.

The most important function of an underwriter is to: D. buy the securities issue from the firm
and resell the securities to the public. One of the major roles of an underwriter is to trade
debt securities. This normally involves buying and selling debt financial securities to the public.

18.What is merchant banking?

A merchant bank conducts underwriting, loan services, financial advising, and fundraising services
for large corporations and high-net-worth individuals

19.What is money market?

The money market is defined as dealing in debt of less than one year. It is primarily used by
governments and corporations to keep their cash flow steady, and for investors to make a
modest profit. The capital market is dedicated to the sale and purchase of long-term debt and
equity instruments

20.. Define a depository

A depository is a facility or institution, such as a building, office, or warehouse, where

something is deposited for storage or safeguarding. Depositories may be organizations,
banks, or institutions that hold securities and assist in the trading of securities

21 Who is called as a lessor and lessee?

A lessor may be called a landlord. A lessor is a person or legal entity that owns a property and
rents it out to a lessee, who in term pays the lessor to live in their property.

The lessee is the party who gets the right to use an asset for a specific period and
makes periodic payments to the lessor based on their initial agreement. The
length of the lease period often depends at least partially on the type of asset or
property
22.What is international lease?
By international leasing is meant a transaction where the lease itself crosses a border - that
is to say, where the lessor and lessee are in different countries, so that the goods are. physically
held under a different legal system from that under which title is held.

23.State the meaning of pension fund.

A pension fund, also known as a superannuation fund in some countries, is any plan, fund, or
scheme that provides retirement income. Pension funds are pooled monetary contributions
from pension plans set up by employers, unions, or other organizations to provide for their
employees' or members' retirement benefits.
24. expand the terms ipo and sebi
an initial public offering of a company's stock. The Securities and Exchange Board of
India's (SEBI) new IPO rules are in focus with Campus Activewear becoming the first company
to issue its public offer, after these rules came into effect recently. The regulations should have
a meaningful impact on IPO market action

25.What do you mean by credit rating?

credit rating agency (CRA, also called a ratings service) is a company that assigns
credit ratings, which rate a debtor's ability to pay back debt by making timely
principal and interest payments and the likelihood of default.
There are a total of seven credit agencies in India viz, CRISIL, CARE, ICRA, SMREA,
Brickwork Rating, India Rating and Research Pvt. Ltd and Infomerics Valuation and
Rating Private Limited.

5 MARKS

Distinguish between merchant banks and commercial banks.

Explain the functions of SEBI. SEBI

17. State the arguments in favour of consumer finance.

18. List out the advantages of lease.

Mention any five types of mutual funds.

What are the significance of financial system?

Write down the various source of consumer finance.

How to SEBI has classified merchant bankers?

Bring out the disadvantages of factoring

What are the basic advantages of Leasing contracts?

List out the various functions of IRDA

Discuss the importance of venture capital.

10 MARKS

Discuss the various functions of SEBI.

Explain the services rendered by merchant banks.

Distinguish between factoring and bill of exchange..

. How life insurance in India is regulated by IRDA?

Explain the functions of a merchant banker.

. Describe the services rendered by the new issue market.

. . State that features of hire purchase system.

.. What are basic concepts of life insurance policy?

What are the different types of life policies offered of public?