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AMITY SCHOOL OF DISTANCE LEARNING
ADL - 51 : Management of Financial Institutions
Assignment - A
( All questions carry equal marks)
Marks – 10
Q1.
Identify the role of commercial banks in finance sector. Describe peculiar
characteristics of commercial banks in India.
Q2.
Do you think that RBI has been successful in regulation and supervision of
banking industry? What is the role of RBI in regulating specifically in the case
of cooperative banks?
Q3.
Explain the role of LIC in providing Life Insurance services in India. How, now
with increase in competition is changing the role of LIC in this sector?
Q4.
Compare and contrast Call money market with Treasury Bills market. Outline
recent developments of these markets.
Q5.
Trace the role of SEBI in regulating Capital Market in India. How financial
derivatives market is difficult to control/regulate?
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ASSIGNAMENT - B
Case Study
Marks – 10
M/s RCTC Ltd. has sought a long term loan of Rs 5 Crores from IDBI but is not very
sure of getting the loan approved. The matter is under consideration and different
type of information sought by IDBI has already been provided. Besides this the
Finance Director Mr. Rahul has personally visited the office of IDBI and explained
various points as desired by IDBI.
In fact M/s RCTC Ltd. is in urgent requirement of money because if adequate
amount of funds are not provided the planned diversification project is likely to fail
and the company might have to suffer huge losses due to delay in the project and
consequential serious implication. Mr. Rahul has been negotiating with IDBI on a
number of issues regarding sanction and release of long term loan of Rs. 5 Crores.
In addition to the alternative of raising finance through IDBI there exist some other
choices. The next possible choice is to raise bridge loan from existing bankers and
simultaneously come out with public issue. While evaluating the proposal to issue
shares to public Mr. Rahul is personally convinced that present market situation is
such that it is difficult to sell a public issue of Rs. Crores. However given the product
range and reputation of the company their bankers are of the opinion that the public
issue will be completely subscribed. The Finance Director is also open to the
suggestion because the need for finance is on long term basis but he has some thing
else in his mind. He is also evaluating other alternatives but is still undecided.
Based on the above situation answer the following:Questions:
1. Enumerate what additional choices may be available before the Finance Director,
to raise the funds?
2. Evaluate pros and cons of raising funds from IDBI and raising funds from IDBI.
3. Enumerate steps to be followed for a public issue. Is there any restriction of
raising some minimum amount from public?
4. Describe the procedure adopted by IDBI for appraisal of term loan.
….2
ASSIGNMENT C
Select the most appropriate choice.
Marks – 10
1.
Bridge Finance is meant for
(i)
Short term financing
(ii) Financing until public issue is subscribed.
(iii) Those companies which expect subscription of their public issue.
(iv) All of the above.
2.
SLR stands for
(i)
Sub-Local Railway
(ii) Statutory Liquidity Ratio
(iii) State Liquidity Resources
(iv) Statutory Liquidity Reserve
3.
CRR
(i)
(ii)
(iii)
(iv)
4.
Open
(i)
(ii)
(iii)
(iv)
5.
The difference between commercial banks can be stated as
(i)
Commercial banks deal in the retail sale of Government securities whereas
investment bankers sell the government securities in whole sale.
(ii) Basic objective of commercial banks is to generate profit whereas investment
bankers have only social objectives.
(iii) Commercial banks accept short term deposits and give only short term loans
whereas investment bankers arrange for long term loans.
(iv) There is no difference between commercial banks and investment banks.
6.
Options and Futures trading in India was started in the Year
(i)
1999
(ii) 2000
(iii) 2001
(iv) 2002
7.
Foreign exchange market in India has
(i)
Fixed rate system
(ii) Floating rate system
(iii) Flexible rate system
(iv) None of the above
8.
Basic
(i)
(ii)
(iii)
(iv)
9.
Interest rates in India during the year 2001 have
(i)
gone up
(ii) gone down
(iii) have not changed
(iv) been higher than that of U.S.A.
stands for
Cash Reserve Ratio
Company's Reserve Ratio
Cash Resource Ratio
Committed Reserve Ratio
Market Operations have an objective of
ensuring availability of products of every one
management of monetary policy
ensuring separation of different markets
stressing fair play for all concerned
determinant of Foreign Capital inflow are
Imbalances in savings and investments leading to current account gaps.
Legal and Institutional Structure
Expected rate of return
All of the above
….3
10.
"Basis Point" in the context of interest rates is equal to
(i)
one thousandth of one percent
(ii) one tenth of one percent
(iii) one hundredth of one percent
(iv) one hundredth of one.
11.
"Call
(i)
(ii)
(iii)
(iv)
12.
Diversifiable risk is
(i)
systematic risk
(ii) unsystematic risk
(iii) neither systematic risk nor unsystematic risk
(iv) both systematic as well as unsystematic risk
13.
Term
(i)
(ii)
(iii)
(iv)
Insurance is
A combination of savings and life insurance.
A pure life insurance risk plan
Meant for a person who wants to get good returns from his insurance.
Not a suitable insurance plan for persons above 35 years of age.
14.
Fiscal
(i)
(ii)
(iii)
(iv)
Policy of the Government is
with respect to revenues and expenditure
relating to interest rates
associated with lending by commercial banks
a part of Monetary Policy.
15.
P/E Ratio means
(i)
market price is to EPS Ratio
(ii) Price Equity ratio
(iii) Product equity ratio
(iv) Price Equation ratio
16
Assest Securitization is
(i)
Conversion of illiquid assets through special purpose vehicle
(ii) Provide adequate collateral security to banks prior to raising loans
(iii) Not suitable in Indian financial environment
(iv) Essential in case of all the loans.
17
Factoring is
(i)
not a financial service
(ii) helpful in business for working capital management
(iii) based on Negotiable Instruments Act
(iv) same as bills discounting
18.
"Tax
(i)
(ii)
(iii)
(iv)
19.
"REPO" transactions means
(i)
Ready Purchase
(ii) Ready forward Purchase
(iii) Purchase as well as sale simultaneously
(iv) None of these
20
RBI allowed general public to purchase government securities at
(i)
Maximum price
(ii) Minimum price
(iii) Average price
(iv) Market price
option" means
a right to buy
a right to buy without obligation
a right to sell
a right to sell without obligation
Haven" means
tax exemption given under the budget
sudden reduction of taxes
a country where taxes are low
not paying taxes although otherwise liable to pay.
….4
21.
Credit rating agencies
(i)
established by large business houses
(ii) evaluate credit worthiness of a company
(iii) are there only in India
(iv) all of the above
22.
"Commercial Papers" are
(i)
unsecured promissory notes
(ii) secured promissory notes
(iii) sold at a premium
(iv) issued for a period of one to two years
23.
Which of the following is not a money market security
(i)
Treasury bills
(ii) National saving certificate
(iii) Certificate of deposit
(iv) Commercial paper
24.
The present interest rate of PPF is
(i)
10%
(ii) 9.5%
(iii) 9%
(iv) 11%
25.
NBFC
(i)
(ii)
(iii)
(iv)
26
Registrar to the issue
(i)
helps in the appointment of lead managers
(ii) drafts the prospectus
(iii) recommends the basis of allotment
(iv) directs the various agencies involved in the issues.
27.
The underwriter has to take up
(i)
the fixed portion of the issue capital
(ii) the agreed portion of the unsubscribed part
(iii) the agreed portion or can refuse it
(iv) none of the above
28.
SEBI
(i)
(ii)
(iii)
(iv)
29.
Warehousing facility means
(i)
storing the stocks with the merchant bankers
(ii) storing the stocks with the brokers
(iii) issuing separate contract notes for different trade
(iv) issuing one contract not for a large quantity traded in parts
30.
Identify the controllable risk
(i)
labour problem
(ii) increase in loan service charge
(iii) cut in subsidy
(iv) technological obsolescence
31.
Share prices
(i)
move either in declining or increasing trend
(ii) may remain flat for a period of time
(iii) the movement of the share prices form a straight line
(iv) the increasing of decreasing move be Zigzag
offer higher rate of interest because of
the best management of funds.
the competition among the NBFCs
the risk involved
the credit rating
would not vet offer documents seeking listing on
OTCEI
NSE
BSE
ISE
….5
32.
Highly liquid security is
(i)
mutual fund units
(ii) treasury bills
(iii) shares
(iv) commercial papers
33.
Investor invest more in stock during their
(i)
early career period
(ii) mid career level
(iii) retirement stage with huge money
(iv) all the above mentioned period
34.
To frame the investment policy you should have
(i)
knowledge about the company and brokers
(ii) investible funds
(iii) knowledge about the investment alternatives
(iv) knowledge about the markets with funds
35.
Zero
(i)
(ii)
(iii)
(iv)
coupon bonds has its origin in
U.S. security market
Wall street
Japan's security market
Dalal street
36.
Apex
(i)
(ii)
(iii)
(iv)
regulatory body for insurance sector is
IRA
IRAA
IDRA
IRRA
37.
NPA
(i)
(ii)
(iii)
(iv)
38.
Financial Institutions are not be regulated by
(i)
RBI
(ii) SEBI
(iii) IDBI
(iv) Government
39.
Maximum duration of a treasury bill can be
(i)
3 months
(ii) 6 months
(iii) 364 days
(iv) 365 days
40.
Capital gains taxes are imposed on
(i)
short term profit
(ii) long term profit
(iii) due to changes in prices
(iv) charged by State Government.
in the context of banking sector stand for
Net Present Amount
Non performing Assets
Net Protected Amount
Non protected amount
….6
AMITY SCHOOL OF DISTANCE LEARNING
Post Box No. 503, Sector 44,
Noida 201 303
ASSIGNMENT No. ADL – 51
Subject Name & Code : Management of Financial Institution
Study Centre
: Defence Colony
Enroll No.
:
Date
:
ASSIGNMENT INSTRUCTION
a) Total weightage given to these assignments is 30%.
b) All assignments are to be completed in your own hand writing.
c) All questions are required to be attempted.
d) Three assignments i.e A, B & C are to be answered. Assignments A will
carry Five subjective questions (10 marks). Assignment B will carry
three subjective questions with a (10 marks) and Assignment C will
carry Forty objective type questions (10 marks)
e) All the three assignments are to be completed by due dates (specified from
time to time) and mailed / given by hand for evaluation at the ASoDL office
Noida / your Study Centre.
f) The evaluated assignments can be collected from your study center / ASoDL
Office after Six week. Thereafter these will be destroyed at the end of each
semester.
Signature :
Name
:
Date
:
() Tick mark in front of the assignments submitted
Assignment “A”
Assignment “B”
Assignment “C”
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