Financial Markets and Institutions 26mLkeG0NO

SVKM’s NMIMS
Anil Surendra Modi School of Commerce
Programme: B.Sc. (Finance) Batch: 2021 – 2024 Semester: I

Academic Year: 2021 – 2022
Subject: Financial Markets and Institutions Marks: 50
Final Examination/ Re-Examination
Instructions:
1. All questions in section I are compulsory. Answer any three out of four questions in section II.
2. Figures to the right indicate full marks.
3. Normal and Scientific Calculators are allowed. Financial Calculators are strictly not allowed.
Section I:
Question 1: (10 marks)
Paytime Ltd. has made an Initial Public Offer for an issue size of 34,500 crore equity shares at
price band of Rs.121 to Rs.126. The demand as per the book building process has been given
below. Draw a table showing the cumulative quantity demanded and subscription percentage at
each price level. Based on that, calculate the cut-off price.
Bid Quantity Bid Price

(no. of equity shares in crores) (Rs.)
2,350 126
6,220 125
7,235 124
9,250 123
9,600 122
10,250 121
Also explain the concept of “Escrow Account” in context of an Initial Public Offer.
Mr. Mehra is a trader in equity shares in India. He bought shares of TRP Ltd., a listed company at
Rs. 88.50 per share, expecting that the stock will go up to Rs. 95 per share. However, a negative
event has occurred and he fears that markets might turn downwards for this stock. He does not
want to suffer a loss of more than Rs. 4 per share. Explain in detail the type of order that he will
place with the broker and at what price?
Also explain the process of auction of equity shares on the stock exchange.
Mr. Dholak is a retail investor in mutual funds. After carefully studying the Indian economy, he
had made some investments in gold and mutual funds. Five years ago, Mr. Dholak invested Rs.
100,000 in Axis Growth ETF. The fund primarily invests in large-cap Indian equities. During the
five-year period, the fund has showed positive returns. The economy also grew during the period
and resultantly, the equity markets rose. In order to assess how successful his investment was, he
decides to compare the returns of the fund against the returns of a benchmark. In such a case, the
most appropriate benchmark was the Sensex, because it tracks the performance of the biggest
large-cap companies in India. The comparison of the fund against the benchmark can be measured
using the tracking error.
For the past 5 years, the returns for the fund and the benchmark are: Year 1= Fund 16.56%, Sensex
21.83%, Year 2= Fund 14.24%, Sensex 11.96%, Year 3 = Fund 4.50%, Sensex 1.38%, Year 4=
Fund 11.00%, Sensex 13.69%, year 5 = Fund 35.59%, Sensex 32.39%. Compute the TRACKING
ERROR. Also, explain the concept of tracking error in brief.
Mr. Goolmaal is an avid investor in the equity markets. However, in recent times, he has not been
keeping well and has not been able to monitor his portfolio. He wants to continue investing. His
son, Mr. Jooljaal, recently completed his MBA from a school and suggested him to invest in
aggressive growth funds. Mr. Goolmaal came across a fund which was giving good positive returns
over the past few years. The fund was named as Equity Deewane growth fund. From the factsheet
the following information was available - Listed shares at cost (ex-dividend) Rs. 40 crores, cash
in hand Rs. 2.46 crores, Unlisted bonds Rs. 2 crores, Other fixed income securities at cost Rs. 9
crores, Accrued dividend Rs. 1.6 crores, Amt payable on shares Rs. 12.64 crores, Expenditure
accrued Rs. 1.5 crores, No. of units (FV – Rs. 10) 80 crore units, Current realisable value of fixed
income securities of FV Rs. 100 (not covered above) Rs. 213 crores. The listed shares were
purchased when index was at 2000 points, the current index value is 4600 points. The value of the
listed bonds and debentures was Rs. 16 crores. There has been a diminution of 12% in the value
of unlisted bonds and debentures. You are requested to compute the net asset value per unit for the
fund.
Section II:
Explain the objectives of the regulators of a financial system.
Write a short note on “Payment Banks”.
Explain the importance of Customer Relationship Management.
Explain the difference between Futures and Forwards contracts.

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SVKM’s NMIMS

Anil Surendra Modi School of Commerce

Programme: B.Sc. (Finance) Batch: 2021 – 2024 Semester: I

Final Examination/ Re-Examination

Question 1: (10 marks)

Bid Quantity Bid Price

Question 2: (10 marks)

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