CS Inter :: Securities Laws and Regulation of financial markets : December 2004

Roll No…………………
Time allowed : 3 hours Maximum marks : 100
Total number of questions : 8 Total number of printed pages : 3
NOTE : Answer SIX questions including Question No.1 which is compulsory.
1. Write notes on any four of the following :
(i)Securities lending
(ii)Green shoe option
(iii)Firm allotment
(iv)Debenture trustees
(v)Money market mutual funds.
(5 marks each)
2. (a)

The lending price of a security is Rs.100. The transaction prices of the securities are (i) Rs.100.25; and (ii) Rs.99.50. You are required to calculate:
(i)lenders’ earning as fee; and
(ii)borrowers earning as rebate.
(3 marks each)
(b)

Global Mutual Fund has launched a scheme named ‘Grand Bonanza’. The net asset value (NAV) of the scheme is Rs.12 per unit; the redemption price is Rs.11.65 per unit; and offer price is Rs.12.50 per unit. You are required to calculate:
(i)front-end load charges; and
(ii)back-end load charges.
(3 marks each)
(c) Define any four of the following :
(i)SAT
(ii)NBFC
(iii)CRISIL
(iv)SPN
(v)OTCEI
(vi)BOLT.
(1 marks each)
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3. (a) Distinguish between any three of the following:
(i)‘Clearing delivery’ and ‘special delivery’.
(ii)‘Call money’ and ‘term money’.
(iii)‘Leverage funds’ and ‘hedge funds’.
(iv)‘Pure instruments’ and ‘hybrid instruments’.
(2 marks each)
(b)

“The derivatives are used as tools of investment risk management.” Discuss this statement and outline various usages of derivatives in investment management.
(6 marks)
(c) What is ‘price stabilisation fund’ ?
(4 marks)
4. (a)

You are Company Secretary of Shine-Well India Ltd., having paid-up capital of Rs.10 crore, predominantly held by the promoters of the company. The company has planned a Greenfield project at an outlay of Rs.50 crore and wants to raise Rs.25 crore by initial capital offering to the public.
Prepare a brief note for the Board of directors highlighting norms related to the following aspects of the issue :
(i)Pricing of equity shares;
(ii)differential pricing; and
(iii)price band.
(10 marks)
(b)

Explain the salient features of the ‘code of conduct’ prescribed by the Securities and Exchange Board of India for the credit rating agencies.
(6 marks)
5. (a)

Discuss briefly the provisions of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 with regard to prohibition of
(i)fraudulent dealings in securities;
(ii)market manipulations
(iii)misleading statements; and
(iv)unfair trade practices relating to securities.
(8 marks)
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(b)

Discuss briefly the provisions of the Securities and Exchange Board of India Act, 1992 relating to penalties leviable by the SEBI in respect of various offences committed by merchant banks and mutual funds.
(8 marks)
6. Provide the requisite norms for the following :
(i)Winding up of venture capital scheme
(ii)Classification of NBFCs
(iii)Registration of depository
(iv)End-use requirement for ECB.
(4 marks each)
7. (a)

Explain any two of the following credit rating symbols and name the concerned agencies :
(i)BBB
(ii)MAAA
(iii)CARE 1
(2 marks each)
(b) What is ALBM ? Discuss its benefits to the lender and the borrower.
(4 marks)
(c) What are the details and information disseminated in a ‘road show’ ?
(4 marks)
(d)

“The organisation and structure of the money market has undergone a sea change in the last decade in India.” Discuss this statement.
(4 marks)
8. (a)

BIG Investment Ltd. wants to commence business of portfolio management services. Prepare a note highlighting the duties and responsibilities of the portfolio managers as set out under the SEBI Regulations.
(6 marks)
(b) What is ‘investor education’ ? Discuss the role of the SEBI in investor education.
(5 marks)
(c) Explain the main functions of a good financial system
(5 marks)

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6/2005/ICL

 

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