Financial services 2018

Section A

1. Name any four non fund financial services?

Non fund based financial service the bank does not deal with funds or cash.

Examples of this type of services are bonds, letter of guarantee and letter of
credit.

2. What is Dry lease?

A dry lease is a leasing arrangement where by an aircraft financing entity

(lessor),such as Air Lease corporation ,provides an aircraft without crew, ground

Staff etc. Dry lease is typically used by leasing companies and banks, requiring

The lessee to put the air craft on its own air operator’ certificate and provide

Aircraft registration.

3. How does credit card differs from debit card in use?

Debit card: allow bank customers to spend money by drawing on funds they
have deposited at the bank.

Credit card: allow consumers to borrow money from the card issuer up to a
certain limit in order to purchase items or withdraw cash.

4. Define credit rating?

Credit rating evaluates the credit worthiness of a debtor ,especially a business

(company) or government ,it is an evaluation made by a credit rating agency of
the debtor’s ability to pay back the debt and likelihood of default.
5. What is SPV in securitization?
A special purpose vehicle (SPV) is created to carry out a specific business
purpose or activity.SPVs are frequently used in structured finance transactions,
such as in asset securitizations, joint venture, or to isolate certain company
assets or operations. SPVs can be created through a variety of entities ,such as
trusts ,corporation, limited partners etc.

6 . Distinguish between hire purchase and installment purchase ?

Hire purchase Installment purchase

Meaning System of buying System of credit sale in

goods by making which a sum of money
regular payment until or debt is paid regularly
the full price is paid. in installment.

Nature It possess the nature of It possess the nature of

hiring selling

Goods can be returned Goods can not be

Return to the seller before the returned
installment

7. What is private equity?

Private equity typically refers to investment funds, generally organized as
limited partnerships, that buy and restructure companies that are not publicly
traded , a private equity firm buys majority control of an existing or mature
firm.
8. who is opt out broker in mutual fund industry?
Opt out broker is someone whose clients will not be levied any transaction
charge by any fund. “opt out” will the default option for all distributors, unless
opted otherwise.
9 .What is derivatives?
A derivative is a contract between two or more parties whose value is based on
an agreed –upon underlying financial asset ,common underlying instruments
includes bonds ,commodities ,currencies, interest rates, and stocks.

10. Name any two depositories?

Depositories are integral institutions in the Indian capital market and their
Functionality can be compared to banking entities .
In India there are two depositories namely National securities depository
Limited (NSDL) and Central depository service limited (CSDL).