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Financial Institutions and Services




                    Notes          4.  Comparing it with others, what is the main difference that you see in the components of
                                       the financial system of developed countries and that of India?
                                   5.  What in your opinion is the main reason for having various regulatory authorities in a
                                       financial system? Is the central monetary authority (the representative of the government
                                       itself) unable to control the entire system?

                                   6.  Why does business need long-term finance? Explain in brief.
                                   7.  Give the advantages of equity shares to:
                                       (a)  The Management and
                                       (b)  The Shareholders

                                   8.  Differentiate between:
                                       (a)  Equity shares and preference shares
                                       (b)  Shares and debentures
                                   9.  Comment on the state of Indian financial system vis a vis its international counterparts.

                                   10.  Why might a company choose debt over equity financing?
                                   11.  What do you consider as the biggest advantage of financial derivatives?
                                   12.  Are  asset  based  securities  of  any  use  to  general  public?  If  yes,  elucidate  upon  the
                                       benefit/s. If no, to whom and how are they beneficial?

                                   Answers: Self  Assessment

                                   1.  Foreign Exchange Management Act,  2.   repaid
                                   3.  long-term                         4.   financial derivative
                                   5.  Shares                            6.   debentures

                                   7.  Time deposits                     8.   stability
                                   9.  financial assets                  10.  autonomy
                                   11. payment and settlement            12.  Fixed Income Securities
                                   13. Demand deposits                   14.  one year
                                   15. private

                                   1.7 Further Readings





                                   Books       Cooper Kersey and Donald R. Fraser, The Financial Market Place, Addison Wesley
                                               Publishing Company (Latest Edition).
                                               Khan M.Y, Indian Financial System, Tata McGraw Hill.

                                               Mandura Jeff, Financial Markets and Institutions, West Publishing Company, New
                                               York.
                                               Meir Kohn, Financial Institutions and Markets, McGraw Hill Publishing Company,
                                               New York.





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