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Fall-2013 Master of Business Administration - MBA Semester 4 MF0017–Merchant Banking and Financial Services-4 Credits (Book ID: B1815) Assignment (60 Marks) Note: Answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme. Each Question carries 10 marks 6 X 10=60. Q1. Explain the concept of merchant banking. Give a small introduction on book building and write about the methods and guidelines for book building. Answer. Merchant Banking is a combination of Banking and consultancy services. It provides consultancy to its clients for financial, marketing, managerial and legal matters. Consultancy means to provide advice, guidance and service for a fee. It helps a businessman to start a business. It helps to raise (collect) finance. It helps to expand and modernize the business. It helps in restructuring of a business. It helps to revive sick business units. It also helps companies to register, Q2. Explain the whole concept of issue management which includes pre-issue and post issue management. Answer. The phrase “issue management” was coined by Howard Chase in April of 1976. Throughout the 1950s and 1960s in his role as a corporate PR officer, Chase was fascinated with the increasing influence that outside forces exerted on corporations. Chase was convinced that there exists within the company a group of professionals with the network of relationships in place that could alert the organization early on that an issue was brewing. The resulting lead time could enable the company to better respond when trouble hit. Q3. Financial services are of several kinds. Financial services are divided into two extensive categories. Explain in detail both the categories of financial services. Answer. Fund Based Services:  Working Capital financing. A firm's working capital is the money available to meet current obligations (those due in less than a year) and to acquire earning assets. China-trust Commercial Bank offers corporations Working

Capital Finance to meet their operating expenses, purchasing inventory, receivables financing, either by direct funding or by issuing letter of credit. Key Benefits:1. Funded facilities, i.e. the bank provides funding and assistance to actually purchase business assets or to meet business expenses. Q4. Give the difference between Bank Vs Depository. Explain the functions performed by depository. Answer. Bank: A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets. A bank links together customers that have capital deficits and customers with capital surpluses. The place where a deposit is placed and kept, e.g., a bank, savings and loan institution, credit union, or trust company. A place where something is deposited or stored as for safekeeping or Q5. Give the introduction of leasing with an example. Explain all the four types of leasing. Answer. Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments. The lessee is the receiver of the services or the assets under the lease contract and the lessor is the owner of the assets. The relationship between the tenant and the landlord is called a tenancy, and can be for a fixed or an indefinite period of time (called the term of the lease). The consideration for the lease is called rent. A gross lease is when the tenant pays a flat rental Q6. Write about the concept of securitization and its features. Explain the process of securitization of debts and its advantages. Answer. Securitization is the process of taking an illiquid asset, or group of assets, and through financial engineering, transforming them into a security. The process through which an issuer creates a financial instrument by combining other financial assets and then marketing different tiers

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