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1. Discuss the role of SEBI in regulating Indian Capital Market.

ANSWER

SEBI is regulator to control Indian capital market. Since its establishment in 1992, it is doing hard work for protecting the interests of Indian investors. SEBI gets education from past cheating with naive investors of India. Now, SEBI is more strict with those who commit frauds in capital market.
The role of security exchange board of India (SEBI) in regulating Indian capital market is very important because government of India can only open or take decision to open new stock exchange in India after getting advice from SEBI.

If SEBI thinks that it will be against its rules and regulations, SEBI can ban on any stock exchange to trade in shares and stocks.

Now, we can explain role of SEBI in regulating Indian Capital Market more deeply with following points:

1. Power to make rules for controlling stock exchange :

SEBI has power to make new rules for controlling stock exchange in India. For example, SEBI fixed the time of  trading 9 AM and 5 PM in stock market.

2. To provide license to dealers and brokers :

SEBI has power to provide license to dealers and brokers of capital market. If SEBI sees that any financial product is of capital nature, then SEBI can also control to that product and its dealers. One of main example is ULIPs case. SEBI said, ” It is just like mutual funds and all banks and financial and insurance companies who want to issue it, must take permission from SEBI.”

3. To Stop fraud in Capital Market

2. Discuss the basic problems of Industrial finance in India

ANSWER

Foregoing analysis shows that India has made sufficient achievement in industrial development during the last five decades and has emerged as the tenth largest industrialized country of the world. But considering the size of the country this development is far from satisfactory.

There are many areas where despite requisite facilities industrial development is either insufficient or completely absent. The pace of industrial progress has been very slow and the growth has always lagged behind the target (except in 7th Five Year Plan). Despite industrial progress self- sufficiency is a distant dream and import substitu­tion a major problem. Under utilization of existing capacity is another major problem which is due to lack of power, raw material and demand.

3. Write short notes on the following (Any Three)
4. i) Corporate disasters
5. ii) Corporate ethics

iii) Managers and professionalism

1. iv) Role played by SEBI in avoiding, corporate disasters, ethics ,and also describe CSR initiatives of corporate world.

4. Explain Principles of Corporate Governance .

ANSWER

Business Roundtable has been recognized for decades as an authoritative voice on matters affecting American business corporations and meaningful and effective corporate governance practices.

Since Business Roundtable last updated Principles of Corporate Governance in 2012, U.S. public companies have continued to adapt and refine their governance practices within the framework of evolving laws and stock exchange rules. Business Roundtable CEOs continue to believe that the United States has the best corporate governance, financial reporting and securities markets systems in the world. These systems work because they give public companies not only a framework of laws and regulations that establish minimum requirements but also the flexibility to implement customized practices that suit the companies’ needs and to modify those practices in light of changing conditions and standards.

5. Explain the Guidelines issued by SEBI towards Corporate Governance.

6. Explain the underlying assumptions of the Black and Scholes option pricing model and why are they needed? Explain in detail Black Scholes option pricing model .

7. Discuss the relationship between the financing decision and investment decision in a firm

8. Discuss RAD and CE approach

9. Explain the advantages of Decision tree approach in investment decisions

10. .Discuss the factors which exercise influence on the demand for working capital in a manufacturing concern

11. Discuss the role of Commercial bank as financial intermediaries

12. What do you mean by share capital? Explain the different forms of share can a company issue?

13. Explain the role of EXIM Bank Financing of exports

14. Explain the relevance which is associated with the financing decision and investment in the organization.

ABOUT CORPORATE FINANCE

Corporate finance is the division of finance that deals with financing, capital structuring, and investment decisions. Corporate finance is primarily concerned with maximizing shareholder value through long and short-term financial planning and the implementation of various strategies. Corporate finance activities range from capital investment decisions to investment banking.

Understanding Corporate Finance

Corporate finance departments are charged with governing and overseeing their firms’ financial activities and capital investment decisions. Such decisions include whether to pursue a proposed investment and whether to pay for the investment with equity, debt, or both.

Types of Corporate Finance Tasks

Capital Investments

Corporate finance tasks include making capital investments and deploying a company’s long-term capital. The capital investment decision process is primarily concerned with capital budgeting. Through capital budgeting, a company identifies capital expenditures, estimates future cash flows from proposed capital projects, compares planned investments with potential proceeds, and decides which projects to include in its capital budget.

Making capital investments is perhaps the most important corporate finance task that can have serious business implications. Poor capital budgeting (e.g., excessive investing or under-funded investments) can compromise a company’s financial position, either because of increased financing costs or inadequate operating capacity.

Corporate financing includes the activities involved with a corporation’s financing, investment, and capital budgeting decisions.

Capital Financing

Corporate finance is also responsible for sourcing capital in the form of debt or equity. A company may borrow from commercial banks and other financial intermediaries or may issue debt securities in the capital markets through investment banks (IB). A company may also choose to sell stocks to equity investors, especially when need large amounts of capital for business expansions.

Capital financing is a balancing act in terms of deciding on the relative amounts or weights between debt and equity. Having too much debt may increase default risk, and relying heavily on equity can dilute earnings and value for early investors. In the end, capital financing must provide the capital needed to implement capital investments.

Short-Term Liquidity

Corporate finance is also tasked with short-term financial management, where the goal is to ensure that there is enough liquidity to carry out continuing operations. Short-term financial management concerns current assets and current liabilities or working capital and operating cash flows. A company must be able to meet all its current liability obligations when due. This involves having enough current liquid assets to avoid disrupting a company’s operations. Short-term financial management may also involve getting additional credit lines or issuing commercial papers as liquidity back-ups.

FINANCE MANAGEMENT

Attempt any Eight questions

• Explain the role of financial planning in financial management?

• “Wealth maximization is an important objective of financial management.” Explain briefly.

• What is meant by financial management? Explain its role.

• Explain the factors affecting the financing decisions.

• Explain objectives of financial management?

• Write a short note on finance function.

• What do you mean by the term “Trading on equity?” How it can be used by an organization?

• What is meant by financial management? Explain any EIGHT decisions involved in the financial management.

• Explain by giving any SIX, why capital budgeting decisions are important?

• Explain the factors affecting the capital budgeting decisions.

• A company wants to establish a new unit in which a machinery of worth Rs. 100000 is involve. Identify the decision involved in financial management?

• Explain by giving any four reasons, why capital budgeting decisions are important?

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