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Institute of Management Technology: Centre For Distance Learning

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INSTITUTE OF MANAGEMENT TECHNOLOGY

CENTRE FOR DISTANCE LEARNING


GHAZIABAD

End-Term Examinations June 2011


Subject Code : IMT-41 Subject Name: Indian Financial Services
Notes:

Time Allowed : 3 Hours Max. Marks : 70

(a) Answer any FOUR questions from SECTION-A and CASE STUDY as given in SECTION-B. Each Question (SECTION-A) carries 14 MARKS and (SECTION-B) Case Study carries 14 MARKS. (b) For students enrolled before January 2008, the Question Paper would be treated for 50 marks instead of 70 marks. (c) No doubts/clarifications shall be entertained. In case of doubts/clarifications, make reasonable assumptions and proceed.

SECTION-A

MARKS : 56

1) 2) 3) 4)

Explain the roles of the various parties involved in the new issues market. Discuss the different types of mutual funds available in the market at present. Define Venture capital financing? What are the main features of venture capital? Write short notes on any three of the following:

(a) (b) (c) (d) 5) 6) 7)

Conglomerate Merger Hire Purchase Operating Lease Financial Lease

What is the money market? Discuss briefly some of the important money market instruments. Differentiate between mergers, amalgamations and acquisitions. Analyse the managerial motives behind mergers and acquisitions. Companies A and B are valued as follows: A Rs. 9 Rs. 18 5000 B Rs. 2 Rs. 12 2000

Earnings per share Price per share Number of shares

Company A acquires Company B by offering two shares of Company A for every three shares of Company B. If there is no economic gain from merger, what is the price-earnings ratio of Company As stock after the merger?

SECTION-B

(Case Study)

MARKS : 14

Apex Steels requires an asset costing Rs. 2 million. Laxmi Finance offers a hire-purchase proposal for a period of 3 years at a flat interest of 12 per cent. Laxmi also gives a lease proposal wherein the lease rental would be Rs. 280 per Rs. 1000 per year for the first 5 years (primary period) and Rs. 20,000 per year for the next 5 years (secondary period). Thereafter the asset would revert to Laxmi. The depreciation rate on the asset is 25 per cent (WDV) and its net salvage value after 10 years would be Rs. 200,000. Apex has a tax rate of 40 per cent and its post-tax cost of debt is 10 per cent. Should Apex choose the hire-purchase or the leasing option?

ETE-June 2011

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IMT-41

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