INSTITUTE OF MANAGEMENT TECHNOLOGY

CENTRE FOR DISTANCE LEARNING

GHAZIABAD

End-Term Examinations June 2011

Subject Code : IMT-08 Subject Name: Indian Financial System
Notes:

Time Allowed : 3 Hours Max. Marks : 70

(a) Answer any FOUR questions from SECTION-A and CASE STUDY as given in SECTION-B. Each Question (SECTION-A) carries 14 MARKS and (SECTION-B) Case Study carries 14 MARKS. (b) For students enrolled before January 2008, the Question Paper would be treated for 50 marks instead of 70 marks. (c) No doubts/clarifications shall be entertained. In case of doubts/clarifications, make reasonable assumptions and proceed.

SECTION-A Q.1 Q.2 Q.3 Q.4 Q.5 Q.6 Q.7

MARKS : 56

The main function of financial system is collection of Savings and their distribution for Investment Discuss. Explain briefly the main elements of the regulations relating to prohibition on Insider Trading. Briefly describe the major type of risks to which bank are exposed. Explain briefly the constitution and management of Assets Management Company with reference to the eligibility criteria and obligations. Define new issue market. Explain the role of Lead Manager for raising the funds from open market. Explain the norms, procedure, rights of security holders in compulsory delisting of companies by stock exchanges? Write short notes on any four of the following: (a) (b) (c) (d) (e) Book Building Dividend Yield Price Earning Ratio Forward and futures Venture Capital

SECTION-B AB Ltd. provides you the following figures:

(Case Study)

MARKS : 14

Particulars Amount (in Rs) Profit before interest and tax 300000 Less: Interest on Debenture @ 12% 60000 Profit before tax 240000 Less: Income Tax @ 50% 120000 Profit after tax 120000 Number of Equity Shares of Rs 10 each 40000 Ruling price in the market 30 PE ratio 10 The company has undistributed reserves of Rs 600000. The company needs to have Rs 200000 for expansion. This amount will earn at the same rate as fund s already employed. You are informed that Debt Equity Ratio higher than 35% will push the PE ratio down to 8 and raise the interest rate on additional amount borrowed to 14%. You are required to ascertain the probable price of the share: 1) if additional funds are raised as debt and 2) if the amount is raised by issuing equity Share

ETE-June 2011

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IMT-08