IPS Academy

Institute of Business Management & Research

Indore (M.P.)

“Internal Exam Assignment: Nov. 2023”

Specialization - MBA(ft) Finance+HR | Section:C

Subject: Indian Financial System

Computer Code: 59987 | Roll No: MFT 22178

Date: 11/DEC/2023

Submitted by: Submitted to:

Kanishk Joshi Dr.Ruchi Mantri
 1.Meet a Stock Broker of your choice and discuss the role played
by him/her and the major activities that he/she undertakes. Also
discuss major changes that have taken place in the arena of
Brokerage Houses in the recent times. Write a note on your
meeting.

I'm afraid I don't have the ability to physically meet people or engage in
real-time conversations as I am a text-based AI model created by OpenAI.
However, I can provide you with information on the role of a stock broker
and recent changes in the brokerage industry.

A stock broker is a financial professional who facilitates the buying and

selling of financial securities, such as stocks, bonds, and other investment
products, on behalf of investors. Their primary role is to execute trades in
the financial markets and provide investment advice to clients. Here are
some key activities typically undertaken by stock brokers:

1. Executing Trades: Stock brokers facilitate the buying and selling of

securities on various financial markets, such as stock exchanges. They
execute trades based on their clients' instructions and market conditions.
2. Providing Investment Advice: Stock brokers analyze market trends,
economic indicators, and company financials to offer investment advice to
clients. They help clients make informed decisions about their investment
portfolios.
3. Portfolio Management: Some stock brokers offer portfolio management
services, where they actively manage clients' investment portfolios to
achieve specific financial goals and objectives.
4. Research: Stock brokers conduct research on various financial instruments
and markets to stay informed about market trends and potential
investment opportunities.
5. Risk Management: Stock brokers assist clients in managing investment
risks by diversifying portfolios and implementing risk mitigation strategies.

As for recent changes in the brokerage industry, several significant trends

have emerged:

1. Technology Integration: The rise of online trading platforms and mobile

apps has revolutionized the brokerage industry. Many traditional brokerage
 houses have adopted technology to offer online trading services, making it
more convenient for investors to manage their portfolios.
2. Commission-Free Trading: Several brokerage firms have shifted to a
commission-free trading model, eliminating transaction fees for buying and
selling stocks. This has made investing more cost-effective for individual
investors.
3. Robo-Advisors: The emergence of robo-advisors has changed the
landscape of investment advisory services. These automated platforms use
algorithms to provide investment advice and manage portfolios based on
clients' risk tolerance and financial goals.
4. Regulatory Changes: Regulatory changes, such as the adoption of new
rules and compliance standards, have impacted how brokerage firms
operate and serve their clients.

While I cannot provide a firsthand account of a meeting with a stock

broker, the information above outlines the general role of stock brokers
and recent trends in the brokerage industry. If you have specific questions
or need more details on a particular aspect, feel free to ask.

2.Meet the Bank Manager of your choice and discuss the different
Project Appraisal Methods that are used by the Banks for
evaluating the proposals for sanction of loans. Write a note on
your discussions.

I don't have the ability to meet people or engage in real-time conversations

as I am a text-based AI model created by OpenAI. However, I can provide
information on project appraisal methods commonly used by banks to
evaluate loan proposals.

When businesses or individuals apply for loans from banks, the banks use
various project appraisal methods to assess the feasibility and viability of
the proposed projects. Here are some common project appraisal methods:

1. Net Present Value (NPV): NPV is a method used to evaluate the

profitability of a project by calculating the present value of expected cash
flows over time. If the NPV is positive, it indicates that the project is
expected to generate more cash inflows than outflows.
2. Internal Rate of Return (IRR): IRR is the discount rate that makes the net
present value of a project zero. It is another measure of project profitability.
 A higher IRR is generally preferred, as it signifies a more attractive
investment opportunity.
3. Return on Investment (ROI): ROI is a ratio that compares the net profit of
a project to its initial cost. It is expressed as a percentage and provides a
simple way to assess the profitability of an investment.
4. Payback Period: The payback period is the time it takes for the initial
investment in a project to be recovered through the project's cash inflows.
Shorter payback periods are generally considered more favorable.
5. Benefit-Cost Ratio (BCR): BCR compares the present value of project
benefits to the present value of project costs. A BCR greater than 1
indicates that the project is expected to generate more benefits than costs.
6. Risk Analysis: Banks also conduct risk assessments to identify and evaluate
potential risks associated with the project. This may include market risks,
operational risks, and financial risks. Understanding these risks helps banks
make informed lending decisions.
7. Feasibility Studies: Banks often require borrowers to conduct feasibility
studies to assess the technical, economic, financial, and operational aspects
of a proposed project. These studies provide detailed information to
support the bank's decision-making process.

During your discussion with a bank manager, you could explore how these
methods are applied in practice, the specific criteria the bank considers, and
any recent trends or changes in project appraisal methods. Keep in mind
that the specific methods and criteria may vary among banks and financial
institutions.
3.What is the role of ‘Primary Markets’ in the financial system of
a country? Discuss the role played by different primary market
Facilitators.

The primary market, also known as the new issue market, plays a crucial
role in the financial system of a country. It is where newly issued securities,
such as stocks and bonds, are bought and sold for the first time. The
primary market facilitates the transfer of funds from investors to issuers and
helps corporations and governments raise capital for various purposes.
Here are the key roles of the primary markets in a financial system:
1. Capital Formation: One of the primary functions of the primary market is
to facilitate the issuance of new securities, allowing companies and
governments to raise capital for expansion, research and development,
debt repayment, or other investment purposes. This process contributes to
economic growth and development.
2. Facilitating Investment: The primary market provides an avenue for
investors to participate in the initial purchase of newly issued securities. This
allows investors to become shareholders or bondholders in companies or
government entities seeking funding.
3. Price Discovery: The initial offering price of securities in the primary
market helps establish their market value. This process, known as price
discovery, is essential for determining the fair market value of securities and
influences subsequent trading in the secondary market.
4. Creating Liquidity: While the primary market itself is not designed for
secondary trading, the initial issuance of securities often generates interest
and trading activity in the secondary market. This increased liquidity
benefits investors who may wish to buy or sell securities after the initial
offering.
5. Diversification of Investment Portfolios: Investors can diversify their
investment portfolios by participating in the primary market. This allows
them to spread their risk across different securities and asset classes.

Facilitators in the primary market include various financial institutions and

professionals who play a crucial role in the issuance and distribution of
securities. These facilitators include:

1. Underwriters: Investment banks and underwriting firms act as

intermediaries between the issuer and investors. They help price and sell
the newly issued securities to the public.
2. Issuing Companies or Governments: The entities seeking funding by
issuing securities are central participants in the primary market. Companies
issue stocks, bonds, or other financial instruments, while governments issue
bonds to raise capital.
3. Regulatory Authorities: Regulatory bodies, such as the Securities and
Exchange Commission (SEC) in the United States or the Financial Conduct
Authority (FCA) in the United Kingdom, oversee the primary market to
ensure transparency, fair practices, and investor protection.
4. Legal Advisors and Auditors: Legal professionals and auditors play a role
in ensuring that the information provided in the offering documents is
accurate and compliant with regulatory requirements.
5. Financial Intermediaries: These include brokers, investment advisers, and
other financial professionals who assist investors in participating in the
primary market.

The collaboration of these facilitators helps ensure the smooth functioning

of the primary market, fostering capital formation and investment
opportunities within the financial system.