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1. Dear students get fully solved assignments by professionals
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ASSIGNMENT
DRIVE FALL 2015
PROGRAM MBADS – (SEM 4/SEM 6) / MBAN2 / MBAFLEX – (SEM 4) /
PGDFMN – (SEM 2)
SUBJECT CODE & NAME MF0017 - MERCHANT BANKING AND FINANCIAL SERVICES
SEMESTER 4
BK ID B1815
CREDITS 4
MARKS 60
Note: Answer all questions. Kindly note that answers for 10 marks questions should be
approximately of 400 words. Each question is followed by evaluation scheme.
Q.1 Explainthe concept ofmerchant banking. Give a small introductionon book buildingand write
about the methods and guidelines for book building.
Ans :Concept of merchant banking :
Merchant Bankingis 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.Ithelpstorevive sickbusinessunits.Italsohelpscompaniestoregister,buyandsell shares
at the stockexchange.Inshort,merchantbankingprovidesawide range of servicesforstartinguntil
running a business. It acts as Financial Engineer for a business.
The functions of merchant banking are listed as follows:
1. Raising Finance for Clients
2. Broker in Stock Exchange
Q.2 Explain the whole concept of issue management which includes pre-issue and post issue
management.
Ans :Introduction of issue management :
Issues or issue management refers to the systematic examination of an organization (usually
companies, public authorities, political parties, associations, etc.), with their environmental

2. concerns.It's aboutthe public to identify emerging, organization relevant issues early and to react
accordingly. This can be through participation in shaping public opinion or done by adapting the
organizationpolicy.Inaddition,anorganizationalsoincludesmeasurestobringsubjects even in the
public debate, the issue management. The term is also used in the project management and the
software testing is used. There are, for example, the problem management , the task of
management or the management and processing of reported errors so designated.
Pre-issue management :
Q.3 Financial services are of several kinds. Financial services are divided into two extensive
categories. Explain in detail both the categories of financial services.
Ans : A. Fund based financial services:
1. These Involve provision of funds against assets, bank deposits, etc.
2.Fund based income comes mainly from interest spread (the difference between the interest
earnedandinterestpaid),leaserentals,income from investments in capital market and real estate
3. Major part of the income isearnedthroughfund-based activities. At the same time, it involves a
large share of expenditure also in the form of interest and brokerage.
1.Equipment leasing :
A lease is an agreement under which a company or a firm acquires a right to make use of a capital
asset like machinery, on payment of a prescribed fee called „rental charges‟. Long-term.
Q.4 Give the difference between Bank Vs Depository. Explain the functions performed by
depository.
Ans : Differences between bank and depository :
On the simplest level, depository is used to refer to any place where something is deposited for
storage or securitypurposes.More specifically,itcanreferto a company, bank or an institution that
holdsandfacilitatesthe exchangeof securities.Oradepository can refer to a depository institution
that is allowed to accept monetary deposits from customers. Central security depositories allow
brokersandother financial companiestodepositsecuritieswhere bookentryandotherservices can
be performed, like clearance,settlementandsecurities borrowing and lending. On the other hand ,
A bank is a financial institution and a financial intermediary
Q.5 Give the introduction of leasing with an example. Explain all the four types of leasing.
Ans : Introduction of leasing with example :

3. Leasingisa processby whicha firmcan obtainthe use of a certainfixedassets for which it must pay
a series of contractual, periodic, tax deductible payments.
The lessee isthe receiverof the servicesor the assets under the lease contract and the lessor is the
ownerof the assets.The relationship between the tenant and the landlord is called a tenancy, and
can be fora fixedoranindefinite periodof time (calledthe termof the lease).The consideration for
the lease is called rent.
Example:
Suppose the AB company takes a new automobile on lease for three year. Also assume that at the
endof three yearsthe AB company will be called to take the ownership of vehicle at no extra cost.
Here not onlythe vehicle istakenonlease butalsothe AB company is using the lease agreement as
a means of financing the automobile.
Explanation all the four types of leasing :
Q.6 Write about the concept of securitization and its features . Explain the process of
securitization of debts and its advantages.
Ans : Introduction of securitization :
Securitizationisthe financial practice of poolingvarioustypesof contractual debt,suchasresidential
mortgages, commercial mortgages, auto loans, or credit card debt obligations, and selling said
consolidated debt as pass-through securities, or collateralized mortgage obligation (CMOs) to
variousinvestors.The cashcollectedfromthe financial instrumentsunderlyingthe securityispaidto
the various investors who had advance money for that right. Securities backed by residential
mortgage receivablesare calledresidential-mortgage-backedsecurities(RMBS), while those backed
by other types of receivables are asset-backed securities.
Features of securitization :
1. Marketability:
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