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Master of Business Administration - MBA Semester 4
MF0017-Merchant Banking and Financial Services
(Book ID: B1815)
Assignment (60 Marks)
Note: Answers for 10 marks questions should be approximately of 400
words. Each question is followed by evaluation scheme. Each Question
carries 10 marks 6 X 10=60.
Q1. Explain the concept of merchant banking. Give a small
introduction on book building and write about the methods and
guidelines for book building.
Answer. Merchant Banking is 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. It helps to revive sick business units. It also
helps companies to register, buy and sell shares at the stock exchange. In
short, merchant banking provides a wide

Q2. Explain the whole concept of issue management which includes

pre-issue and post issue management.
Answer. The phrase issue management was coined by Howard Chase in
April of 1976. Throughout the 1950s and 1960s in his role as a corporate PR
officer, Chase was fascinated with the increasing influence that outside forces
exerted on corporations. Chase was convinced that there exists within the
company a group of professionals with the network of relationships in place
that could alert the organization early on that an issue was brewing. The
resulting lead time could enable the company to better respond when trouble

Q3. Financial services are of several kinds. Financial services are

divided into two extensive categories. Explain in detail both the
categories of financial services.
Answer. Fund Based Services:
Working Capital financing.
A firm's working capital is the money available to meet current obligations
(those due in less than a year) and to acquire earning assets. China-trust
Commercial Bank offers corporations Working Capital Finance to meet their
operating expenses, purchasing inventory, receivables financing, either by
direct funding or by issuing letter of credit.

Q4. Give the difference between Bank Vs Depository. Explain the

functions performed by depository.
Answer. Bank: A bank is a financial institution and a financial intermediary
that accepts deposits and channels those deposits into lending activities,
either directly by loaning or indirectly through capital markets. A bank links
together customers that have capital deficits and customers with capital

Q5. Give the introduction of leasing with an example. Explain all the
four types of leasing.
Answer. Leasing is a process by which a firm can obtain the use of a certain
fixed assets for which it must pay a series of contractual, periodic, tax
deductible payments.
The lessee is the receiver of the services or the assets under the lease contract
and the lessor is the owner of the assets. The relationship between the tenant
and the landlord is called a tenancy, and can be for a fixed or an indefinite
period of time (called the term of the lease). The consideration for the lease is
called rent. A gross lease is when the tenant pays a flat rental

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Q6. Write about the concept of securitization and its features. Explain
the process of securitization of debts and its advantages.
Answer. Securitization is the process of taking an illiquid asset, or group of
assets, and through financial engineering, transforming them into a security.
The process through which an issuer creates a financial instrument by
combining other financial assets and then marketing different tiers of the
repackaged instruments to investors. The process can encompass any type of
financial asset and promotes liquidity in the marketplace.