Ans.1 Debt Market:- The debt market is the market where debt instruments are traded.

Debt
instruments are assets that require a fixed payment to the holder, usually with interest. Examples
of debt instruments include bonds (government or corporate) , loans and mortgages etc. Debt
securities are negotiable financial instruments, meaning they can be bought or sold between
parties in the market. They come with a defined issue date, maturity date, coupon rate, and face
value. Debt securities provide regular payments of interest and guaranteed repayment of
principal.

Ambey Ltd. is planning to raise further capital in the debt market. They can use below mentioned
techniques for raising funds in the debt market:-

1. Bank Loans:- A common form of debt financing is a bank loan. Banks will often assess the
individual financial situation of each company and offer loan sizes and interest rates accordingly.
Bank loans can be structured as term loans or lines of credit, providing the company with access
to funds for its capital requirements. The terms and interest rates for bank loans can vary based
on the company's creditworthiness and negotiation with the lenders. Ambey Ltd. can take short
term or long term loans from banks as per their requirements and can expand their business
accordingly.

2. Syndicated Loans:- Ambey Ltd. may also think about using syndicated loans to raise finance.
Loans offered by a consortium of lenders, typically under the direction of a lead arranger, are
referred to as syndicated loans. These loans are frequently utilized to fund significant financial
requirements, such as acquisitions or capital investments.

3. Corporate Bonds:- Another way to raise capital in the debts market is corporate bond. A
corporate bond functions as a loan between an investor and a corporation. The investor agrees to
give the corporation a certain amount of money for a specific period of time. In exchange, the
investor receives periodic interest payments. Ambey Ltd. can issue corporate bonds to raise
capital. These bonds represent debt obligations and can be sold to investors in the debt market.

4. Debentures:- Ambey Ltd. can raise funds through the issue of debentures, which has a fixed
rate of interest on it. The debenture issued by a company is an acknowledgment that the
company has borrowed an amount of money from the public, which it promises to repay at a
future date.

5. Family and credit card loans:- Other means of debt financing include taking loans from
family and friends and borrowing through a credit card. They are common with start-ups and
small businesses. Ambey Ltd. can also use the same.

6. Commercial Paper:- Commercial paper is an unsecured, short-term debt instrument issued by

corporations. Commercial paper is usually issued at a discount from face value. It reflects
prevailing market interest rates. It can be a cost-effective way to raise short-term capital through
commercial paper.
7. Convertible Debt:- With convertible debt, a business borrows money from a lender or
investor where both parties enter the agreement with the intent (from the outset) to repay all (or
part) of the loan by converting it into a certain number of its preferred or common shares at some
point in the future. Ambey Ltd. can raise its funds through this option as these instruments give
investors the option to convert their debt holdings into equity shares of the company at a
predetermined price or conversion ratio.

Conclusion:- To conclude we can say that nowadays debt market has been helping
businesses to grow exponentially, giving them easy access to working capital, helping finance
supply chains, and fund business operations. However, raising debt efficiently is the key to
overcoming common challenges enterprises face while raising debt. So it's important for Ambey
Ltd. to evaluate the terms, costs, and risks associated with each option before making a decision
to raise capital from the debt market.

Ans.2 Role of NBFCs:- NBFCs play a crucial role in mobilising the savings of investors so
that various sectors in an economy can access to the required finance. The development of each
sector is directly dependent on the availability of the required finance. It is an institution that
provides an array of bank-related services, such as investment, risk pooling, contractual savings
and market brokering. It also provides finance to small-scale businesses that cannot raise funds
through stocks and bonds due to high transaction costs. By availing adequate finance, small
businesses can carry out their operations smoothly. As against traditional banks NBFCs supply
long run credit to trade & commerce industry. They facilitate to fund large infrastructure projects
and boost economic development.

Types of NBFCs '-

NBFCs as per business activity can be categorized as follows:-

i) Risk-pooling institutions:- Insurance companies are called risk pooling institutions that
provide coverage against various adverse situations such as illness, death, property damage and
other risks of loss. An insurance company collects premium from individuals or companies
(called insured) and provides compensation (as promised in an insurance contract) in case of any
loss occurs. Two main types of insurance companies include general insurance and life
insurance. Health insurance, motor insurance, home insurance, etc. are examples of general
insurance. On the other hand, life insurance provides coverage against the life of an individual.

ii) Contractual savings institutions:- These institutions provide an opportunity to individuals

for investing in collective investment vehicles (CIVs) as a fiduciary. Investors do not play a
principal role in CIVS as they invest their savings through contractual savings institutions.
Pension funds and mutual funds are the examples of contractual savings institutions.
iii) Market makers:- These are institutions that facilitate transactions for financial assets by
quoting a buy and sell price. All securities (equities, debentures, derivatives and currencies)
transacted in capital and money markets are dealt by market makers.

iv) Specialised sectorial financiers:- As the name suggests, a limited range of financial services
is provided by these NBFIS to a targeted sector. For example, real estate financiers provide loans
to prospective homeowners.

v) Financial service providers:- These include various brokers that work on a fee-for-service
basis for improving the functional efficiency of the financial system. These providers include
management consultants and financial advisors.

Conclusion:- To conclude we com say NBFCs have turned out to be engines of growth and
are integral part of the Indian financial System. They are playing a significant role in meeting
financial requirements of the medium & Small sized industries and also contributing in the
development of country's economy.

Ans3 a) Introduction:- The currency market refers to that part of the financial market in
which the currency of one country is traded for the currency of another country. This trade takes
place at the existing exchange rate. The currency market, also known as foreign exchange
market, helps countries to trade with each other by facilitating imports, exports and capital
transfers in a common currency.

The foreign exchange & (forex) market is a decentralized market where various participants
from around the world buy, sell & exchange different currencies. Foreign exchange serves
different purposes for various foreign market participants such as governments, traders,
corporations, investment funds and banks. These participants have been explained as below:-

1. Corporates:- Large corporate houses are one of the major users of foreign exchange;
therefore, they are a key participant in the forex market. These houses require forex for their
business dealings such as imports, exports and capital flows. In addition, the employees of
MNCs may also require visiting overseas for business purposes. Frequent travelling by corporate
employees and corporates' business dealings involve foreign exchange for which corporates
require the foreign exchange market. An MNC, such as Infosys, Tata, etc., converts tens of
millions of rupees each year.

2. Consumers and travellers:- Whenever a purchase is made from the home country for a
product or service belonging to a company located abroad, the buyer needs to pay for that
product or ser- vice in terms of the related country's foreign currency, and for this, the buyer
needs to access a forex market. Whenever an individual needs to travel to an overseas location,
he/she requires foreign exchange in the local currency for which he/she needs to access a forex
market.

3. Investors, speculators and arbitrageurs:- Speculators and arbitrageurs require foreign

currency in order to take advantage of the exchange rate fluctuations in the forex market and
derive some profit from it. Investors also require forex when they want to in- vest in securities
such as equities or commercial papers that are denominated in some foreign currency.

4. Commercial and investment banks:- Banks are key players in the foreign exchange market.
They are responsible for buying and selling of currencies of different countries in accordance
with the rules and regulations of the governing bodies. Commercial banks are important because
they streamline the process of foreign exchange for their clients that comprise both individuals
and corporates.

5. Governments and central banks:- Every country has its own central bank that is responsible
for effective and smooth functioning of the financial system of the country. In particular, central
banks are responsible for implementing the monetary policy and fiscal policy for their respective
countries. These banks also regulate the foreign exchange market by taking appropriate measures
whenever required. Additionally, the banks determine the interest rate that directly or indirectly
affects the foreign exchange market.

Conclusion:- To conclude we can say that foreign exchange markets have become the world's
most liquid & continuous market with trillions of dollars being traded daily. Whether trading in
the spot market, future markets of the options markets, speculators and hedgers can find an
instrument and the leverage that meet their needs. It is for the largest financial market in the
world and is comprised of a global network of financial center that trans ad 24 hours a day,
closing only on the weekends.

Ans.3 b) Introduction:- It is true that regulatory mechanisms are implemented to ensure that
there is always a balance between the inflow of money and the outflow of funds so that financial
markets are able to function efficiently and effectively. Regulatory institutions are generally part
of the executive section of the government or have statutory authority to carry out their
operations with oversight from a legislative department. Their actions are usually open to legal
review. Some of the regulatory institutions are RBI, SEBI, IRDA and FMC.

Important regulatory authorities in India and their functions:-

1. RBI: - This is the central banking institution of India, which established in the year 1935. The
main purpose of establishing the RBI was to regulate the financial system of the country. This
bank is fully owned by the Government of India. The main functions of the RBI include:
a) Issuing of currency notes and coins:- Section 22 of the RBI Act 1934 has the provision that
the RBI has the sole right to issue notes and currency coins of all denominations.

b) Managing the balance of payments position of various entities:- The RBI efficiently and
effectively manages the balance of payments of different entities through credit control thus,
enabling decrease in the money supply in the country.

c) Managing the resources of the government:- The RBI is responsible for managing the
public debt of the government, such as payment of interest and repayment of loans.

d) Regulating and monitoring various operations of commercial banks:- It is responsible for

regulating and monitoring the liquidity position and cash reserve ratio of the banks and their
dealings in foreign exchange markets.

e) Reviewing and updating various credit policies at different points of time due to market
dynamics:- It is responsible for decreasing credit supply so as to reduce the imports and thus
preventing the outflow of foreign currency and also responsible for increasing the credit supply
so that exports increase, thereby allowing the inflow of foreign currency in the country.

2. SEBI:- This regulatory body was established in 1992 to ensure that the investors' interest is
protected when dealing with the securities of various companies. In addition, SEBI is responsible
for regulating, maintaining and developing various market opportunities of the securities. Some
of the key functions of SEBI are as follows:

a) Regulating transactions in the stock market exchange:- SEBI is responsible for regulating
different transactions that take place in various stock exchanges of the country.

b) Admitting and registering various stock brokers:- SEBI is responsible for admitting and
registering a broker who would be allowed to carry out trading in the stock market.

c) Regulating the functioning of sub-brokers, agents, share transfer agents, etc.:- SEBI also
regulates the functioning of brokers, sub-brokers, transfer agents to prevent any malpractices,
which they may adopt.

d) Registering and regulating the working of depositories and depository participants:-

The functions related to depositories and depository services are regulated, monitored and
tracked by SEBI for any malpractices being adopted by the depositary agents.

e) Promoting investor education and providing various training programmes to

intermediaries for performing day-to- day operations:- SEBI conducts frequent training and
awareness sessions for investors, brokers, agents, etc., so that they remain informed and are thus
able to take decisions based on the latest facts.

3. IRDA:- This regulatory body, established in 1999, ensures that various insurance companies
are regulated and monitored efficiently and effectively. The basic objective of establishing the
IRDA was to ensure that various entities, which are holders of different policies, get their claim
genuinely. Hence, in order to meet this objective. the IRDA is required to maintain a stipulated
deposit with the RBI which is a certain percentage of the total premium collected from different
entities.

Some of the key functions of IRDA are as follows:

a) Specifying code of conduct for surveyors and loss assessors:- The code of conduct is
prescribed by the IRDA when the surveyors and the loss assessors visit the site so as to process
the person claim of the insured person.

b) Protecting the interests of various policy holders:- The IRDA actively improvises various
processes to ensure that the interest of the policy holders is sustained and maintained effectively.

c) Promoting awareness and education to various entities:- The IRDA helps in educating
policy holders, as well as agents and brokers to prevent the occurrence of any unhealthy
practices.

d) Controlling and regulating various companies in the insurance sector:- It is undertaken to

ensure that the insurance sector of the country is operating at an optimum level.

4. FMC:- This is the chief regulator of the commodity market in India, which was established in
the year 1953. The Ministry of Finance oversees various operations of this body in its day-to-day
transactions. This body allows commodity trading in various exchanges of India. FMC was
merged with SEBI in the year 2015.

Some of the main functions of FMC are as follows:

a) Assisting Government:- To assist the government in respect of the recognition from any
association or any matter that may arise out of the administration of the Forward Contracts Act,
1952.

b) Check on Markets:- To keep a check on the forwards market and take necessary actions.

c) Publishing of Reports:- To publish various reports regarding the functioning of commodity

markets.

d) Improving operations of FMC:- To identify and support any measures and make
recommendations so as to improve the operations of the FMC as well as the functioning of the
market

e) Reviewing documents:- To review and inspect the various accounts and other documents of
recognised associations. The FMC also identifies trends and patterns so that improvements can
be made.
Conclusion:- To Conclude we can say Hat a Regulatory authority forms the structure of the
society we live in. It assists us in managing our activities by imposing strict rules & regulations.
The regulators have supervisory control over several sectors of human activity.