1) The goal of the firm should be
A. maximization of profits
B. maximization of shareholder wealth
C. maximization of consumer satisfaction
D. maximization of sales
2) An example of a primary market transaction is
A. a new is
Mid Term Reference Set One
Multiple Choice Questions (35*2.8)
1. Insider trading is:
C. impossible to have in our efficient market.
D. discouraged, but legal.
2. The primary goal of financial management is to:
A. maximize current div
Problems for lecture 1-of-7 for Exam 1. See the course website DG#1 for complete lesson plans.
Find this document at http:/bama.ua.edu/~fi302/Problems in Lecture.pdf
Title: FF2. What are the three sources of financial value?
time value, tra
Chevelle, Inc., has sales of $39,500, costs of $18,400, depreciation expense of $1,900, and interest expense of $1,400
If the tax rate is 35 percent, what is the operating cash flow?
Operating Cash Flow To calculate operating cash flow (OCF), w
non-specified list to the specified list. The key ones are that the company
must have an
equity base of Rs. 10 crore, a market capitalization of Rs. 2530 crore, a
public holding of
35 to 40 percent, a shareholding population of 15,000 to 20,000 a
financial and nonfinancial assistance to various industrial sectors in
Shipping Credit and Investment Corporation of India (SCICI), 1986.
Infrastructure Leasing and Financial Service Limited (IL and FS),
Technology Development and Informat
mainly for the purpose of rating of short-term, medium-term and longterm debt instruments
of the corporate and banking companies. It was set up in the year 1991
by the leading
banking and financial institutions.
Credit Rating Symbols of Investment Informa
14. Stock broking.
15. Foreign Collaboration and foreign currency finance.
16. Counseling to Small Scale Industries.
17. Capital Structure counseling to cooperative sectors.
18. Meeting the working capital needs.
Merchant Banking Organizations
In India, m
by the IDBI and co-sponsored by other term-lending institutions, LIC,
GIC, other insurance
companies, commercial banks, and other financial institutions; viz., SBI
Caps, SHCIL, and
ILFs. Its objectives are : (a) to provide nation-wide equal access and
India, in January 1988 jointly by ICICI, UTI, LIC, GIC and ADB. The
following are the
major objectives of the Credit Rating Information Service of India
(a) To rating of companies debentures, fixed deposits programmes,
Life Insurance General Insurance Life Insurance General Insurance
LIC of India Postal Life Insurance
Oriental fire and
The par value of equity shares is generally Rs. 10 (the most popular
Rs.100. As per the SEBI guidelines any company coming with new
issues from April 2000
onwards the par value of their shares should be of Rs.10 denomination.
and finances projects by subscribing shares and debentures of private
contribution to financing of industries in the private corporate sector is
also indirect. The
investment in the share capital and bonds of IFCI, SFCs, UTI and IDBI
individual and institutions. The primary market discharges the
important function of
transfer of savings, especially of the individual, Government and public
In the primary market, the new issues of securities are presented in the
Bank and Financial Institutions as nominated directors to the State
STATE FINANCE CORPORATION IN TAMIL NADU
The Madras Industrial Investment Corporation (MIIC) was started as
early as 1949, under
the companies act and it was renamed a
On June 15, 1998 National Stock Exchange launched two new Reference
Rates for the
loans of Inter-Bank Call Money Market. These rates are Mumbai InterBank Offer Rate
(MIBOR) and Mumbai Inter-Bank Bid Rate (MIBID).
MIBOR will be the indicator of Landing Rat
CARE AAA CARE AAA PR1 Highest Safety
CARE AA CARE AA PR2 High Safety
CARE A CARE A PR3 Adequate Safety
CARE BBB CARE BBB - Moderate Safety
CARE BB CARE BB Inadequate Safety
CARE B CARE B PR 4 Risk Prone
CARE C CARE C - Substantial Risk
CARE CARE PR5 Defau
Banks, in respect the above three agencies and advices the government
thereon. It makes
loans to state government to enable them to subscribe to the share
capital of co-operative bank.
It helps in promoting research in agriculture and rural development.
of a bank, financial institutions, company or firm.
Merchant Banking in India
In India, the first merchant banking services were started only in 1967
by National Grindlays
Bank followed by Citi Bank in 1970. In 1972 State Bank of India started
INDUSTRIAL RECONSTRUCTION BANK OF INDIA (IRBI)
In April 1971, Industrial Reconstruction Corporation of India (IRCI)
was set up by IDBI
and other development and public sector banks. IRCI was reconstituted
and renamed as
Industrial Reconstruction Ba
SBI and its
Fig. 13.3 Indian Banking System
Growth and Structure of Commercial Banks in India
S. No. Particulars 1951 1986 1996 2002 2005
1. Number of Sch. Banks 92 79 91 98 98
Investment information and credit rating agency of India.
In 197071 loan sanctioned was Rs. 32.2 crore, in 1998 it was reached
to Rs. 8684 crore.
The total sanctioned by Industrial finance corporation of India as at the
end of March
A right issue involves selling securities in the primary market by issuing
rights to the
existing shareholders. When a company issues additional equity capital,
it has to be offered
in the first instance to the existing shareholders on a pro rata
Fig. 12.5 Types of Mutual Fund
Public Sector Mutual Fund
Unit Trust of India is one of the public sector mutual funds operating
from 1964 an
Industrial Investment Bank of India Ltd (IIBI) under the Companies Act.
IIBI acts as a
coordinating agency in the field of reconstruction.
Industrial Reconstruction Bank of India sanctioned financial assistance
to various sick
issuing company in the primary market. However, once allotted, the
securities can thereafter
be sold and purchased in the secondary market only.
A security emerges in the primary market, but its subsequent movement
takes place in
the secondary market. Sec
Industrial Credit and Investment Corporation of India is managed by
the board of directors
which full time chairman. The directors are nominated by Government,
Reserve Bank of
India Foreign shareholders and IDBI.
234 Financial Management
Subsidies of Indu
decide. Net Assets Value of the mutual fund is calculated by the
Special Financing 223
Net asset value of the unit =
Net assets value of fund
Number of outstanding units
Closed Ended Mutual Fund
Closed ended mutual funds have fixed ma