SUBJECT :MARKETING FINANCE MANAGEMENT

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Total Marks: 80

SUBJECT :MARKETING FINANCE MANAGEMENT

N.B. : All questions are compulsory

Question.1. Define the different types of scheme’s floated by mutual fund’s briefly.

Answer: The Mutual Funds usually invest their funds in equities, bonds, debentures, call money etc., depending on the objectives and terms of scheme floated by MF. Now a days there are MF which even invest in gold or other asset classes.

What is NAV? Define NAV: NAV means Net Asset Value. The investments made by a Mutual Fund are marked to market on daily basis. In other words, we can say that current market value of such investments is calculated on daily basis. NAV is arrived at after deducting all liabilities (except unit capital) of the fund from the realisable value of all assets and dividing by number of units outstanding. Therefore, NAV on a particular day

Question.2. Analyse the trend in different call rates in India.

Answer: The Reserve Bank of India left its benchmark repo rate at 6.75 percent during the meeting held on February 2nd, as expected. While awaiting further data on inflation, policymakers said they would stay accommodative but look forward to the government's budget statement at the end of February. The central bank also decided to keep the cash reserve at 4.0 percent, to provide liquidity under overnight repos at 0.25 percent and to maintain daily variable rate repos and reverse repos to smooth liquidity. Interest Rate in India averaged 6.71

Question.3. Comment on the following statements.

Question.A) Public Deposits are short term substitute for Money.

Answer: Public Deposits: The deposits that are raised by enterprises directly from the public are called as public deposits. The Rates of interest obtained on public deposits are comparatively higher than that obtained from the bank deposits. A person can fill up a prescribed form of the organization and deposit the money on to it. The organization would in return issue an acknowledgement in the form of a deposit receipt. It is only Public deposits take care of both medium and short-term financial requirements of a business. These deposits

Question.b) Public Deposits are addition to savings.

Answer: The insurance coverage of public unit accounts depends upon the type of deposit and the location of the insured depository institution. All time and savings deposits owned by a public unit and held by the public unit's official custodian in an insured depository institution within the State in which the public unit is located are added together and insured up to $250,000. Separately, all demand deposits owned by a public unit and held by the public unit's official custodian in an insured depository institution within the State in which the public unit is located are added together and insured up to $250,000. For the purpose of these rules,

Question.c) Direct acceptance of Deposits by companies pose threat to the working of credit policy in theeconomy.

Answer: The Lessors

1. Specialised Leasing Companies: There are approximately 400 big companies with an organisational focus on leasing, and therefore, called as leasing companies.

2. Banks and Bank-subsidiaries: In February 1994, the RBI allowed banks to directly enter leasing. Till then, only bank subsidiaries were allowed to engage in leasing operations, which was regarded by the RBI as a non-banking activity.

3. Specialised Financial Institutions: A number of

Question.d) The entries in the public deposit raises the debt/equity ratio of the companies.

Answer: An official custodian is an officer, employee, or agent of a public unit having official custody of public funds and lawfully depositing the funds in an insured institution. In order to qualify as an official custodian, a person must have plenary authority - including control - over the funds. Control of public funds includes possession as well as the authority to establish accounts in insured depository institutions and to make deposits, withdrawals and disbursements.

Deposit insurance coverage cannot be increased by dividing

Question.4. Write a brief note on discounting service and its importance in money market.

Answer: As money became a commodity, the money market became a component of the financial markets for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less. Trading in money markets is done over the counter and is wholesale.  There are several money market instruments, including treasury bills, commercial paper, bankers' acceptances, deposits, certificates of deposit, bills of exchange, repurchase agreements, federal funds, and short-lived mortgage-, and asset-backed securities. The instruments bear differing maturities, currencies, credit risks, and structure and thus may be used to distribute exposure.  Money markets, which provide liquidity for the global

Question.5. The good absorptive capacity to government securities market has increased due to thedisproportionate support by the RBI. Justify.

Answer: In response to the macroeconomic crisis, a programme of stabilisation and structural adjustment was initiated in July 1991, with wide ranging reform measures encompassing the areas of trade, exchange rate management, industry, public finance and the financial sector. Fiscal correction, exchange rate adjustment, monetary targets and inflation controls constituted the immediate measures for macroeconomic stability.

These measures were supported by structural reforms in the form of industrial deregulation, liberalisation of foreign direct investment, trade liberalisation, overhauling of public enterprises and financial sector reforms. Apart from aiming at restoring the economic stability on both domestic and external fronts, the economic reform programme

Question.6. Give a brief note on different types of options and highlight the various services provided bythem.

Answer: In finance, an option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price on or before a specified date, depending on the form of the option. The strike price may be set by reference to the spot price (market price) of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount or at a premium. The seller has the corresponding obligation to fulfill the transaction – to sell or buy – if the buyer (owner) "exercises" the option. An option that conveys to the owner the

Question.7. What are the drawbacks of foreign capital inflow.

Answer: Capital inflows from Multi National Companies (MNCs) primarily refer to inward investment from MNC into European economies.

The effect of these capital inflows involves increased levels of Investment. MNCs inject investment into the economy. This causes several benefits for the economy.

1. Increased Aggregate Demand: As a component of AD, higher Investment will boost AD, causing improved economic growth. This should lead to

Question.8. What is the relationship between short term and long term interest rates.

Answer: You can think of interest as the price for renting money, whether you are borrowing it or loaning it. When you put your money into a savings account, the bank pays you interest for the use of your money. When you take out a mortgage to buy a house, you pay interest to the mortgage company to use its money. The amount of interest charged or earned depends in part on whether the loan is long-term or short-term.

Term: When it comes to interest rates, short-term and long-term are ambiguous phrases. Different financial experts and organizations define the terms differently. For example, the Securities Industry and Financial Markets Association considers bonds with

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