FIFTH SEMESTER B.B.

A INTERNAL EXAMINATION 2013 FINANCIAL SERVICES AND INSTITUTIONS (THEORY) Section A Answer any two questions of the following. b. What is leasing financing? Main features of leasing? c. What is factoring? List the different types of factoring? d. What are treasury bills? Section B Answer any one of the following. a. Differentiate between capital market and money market? b. Briefly explain different methods of factoring? c. Explain the instruments of money market? Section C (Compulsory) 15 X 1 =15 5 X 1 = 5marks 2 X 2 = 5 marks a. what is capital market? List out the instruments of the capital market?

a. ABC enterprise is venturing into the diversification of its activities. To facilitate production the company is planning to invest into the heavy machine costing Rs 8500000. Buying through a loan. The company has to raise a loan of Rs 8500000 at 20% p.a. and pay in equal year end installment for next five years. Leasing. The company needs to pay the annual year end lease rent of Rs 2200000 for next 5 years. The company falls into 40% tax bracket and applies WDV method for depreciation of its machine at 15% p.a. and the discounting factor is 10%. Advice the suitable option.