Section-A

problem1) Describe the importance of financial institutions in promoting economic growth.

problem2) “With the increasing adoption of information Technology, the banking in India has undergone a seachange.” Comment on this statement with particular reference to new Private Sector Banks.

problem3) What are the powers vested with SEBI to promote development of securities market & to protect the interests of investors?

problem4) Do you believe that Non-banking finance companies have played their role as effective financial intermediaries in India? Have they contributed to the economic growth?

Section-B

Case Study

Pankaj is considering a rights offering to raise funds to finance new projects that requires Rs.4.5 crore. The floatation cost would be 10% of funds raised. Company at present has 20 lakh shares outstanding & the correct market price of its share is Rs.100. The subscription price has been fixed at Rs.50 per share.

I) How many shares must be sold to raise the funds?

II) How many rights are required to buy one new share?

III) What is the value of one right share?

IV) Illustrate the impact on the shareholder’s wealth who holds required rights to buy one new share if:-

a) He exercises his right

b) Sells his right

c) Does not exercise his right