Attempt all the questions.
Section-A
Question1) Why do companies issue share in the market? What is the relationship between the new issue market and secondary market?
Question2) Describe the different regulatory frameworks on Merchant Banking.
Question3) Explain in Brief some significant recent development in the merchant banking.
Question4) Explain the important instruments and their features through which capital can be raised by a corporate from the Capital Market.
Section-B
Case Study
GPC Ltd. Has received an offer to either purchase the building for Rs. 4 Lakhs or take it on lease for an annual rent of Rs. 40,000. Cost composition of the building includes Rs. 40,000 for land. If building is purchased, renovation would cost another Rs. 60,000.
Though, if the building is leased, GPC ltd. has agreed to pay the property tax and insurance, and make necessary repairs.
It is estimated that annual cost would be as follows:
Repairs and maintenance Rs.12,000. Property taxes Rs.8,000. Insurance @1.11% (Rounded off to the nearest Rs. 10) to be computed on the value before renovation and is expected to remain constant at that level. The building has an estimated life of 20 years and to be depreciated on a straight line method. The salvage value would be equal to the cost of demolition. The amount required to purchase and remodel the building will yield 8% interest free of tax invested in good marketable securities.
Case Question:
Question5) You are needed to create a statement showing annual savings or extra cost involved if the building is purchased as compared to leasing.