Commerce (English Medium) कक्षा १२ - CBSE Important Questions for Business Studies

When the proportion of debt and equity is such that it results in an increase in the value of equity share the ______ is/are said to be optimal.

‘Zenith Mall’ is a famous shopping mall in Mumbai, owned by ‘Pinnacle Group'. It is very popular for its international and national brands of fashionable clothes, restaurants, cinema halls and food courts.

The management of Pinnacle Group has decided to open a new branch of the mall in Pune. This decision was very crucial for the management as it involves huge amounts.

1. Identify and state the financial decision involved in the above case.
2. State any two factors affecting the decision identified in (i) above.

Match the factors affecting fixed capital requirements given in Column - I with their explanations given in Column - II:

______ refers to the increase in profit earned by the equity shareholders due to the presence of fixed financial charges like interest.

Which of the following is not a factor affecting capital structure of a company?

By doing all this Harish strives to achieve the two main objectives of an important concept of financial management. Identify the concept and explain its two objectives.

Mr. Sanjay Nehra was the Chairman of 'Taran Bank.' The bank was earning good profits. Shareholders were happy as the bank was paying regular dividends. The market price of their shares was also steadily rising. The bank was about to announce taking over of 'Vena Bank.' Mr. Sanjay Nehra knew that the share price of 'Taran Bank' would rise on this announcement. Being a part of the bank, he was not allowed to buy shares of the bank. He called one of his rich friends Sudhir and asked him to invest Rs 5 crores in shares of his bank promising him the capital gains. As expected the share prices went up by 40% and the market price of Suhir's shares was now Rs 7 crores. He earned a profit of Rs 2 crores. He gave Rs 1 crore to Mr. Sanjay Nehra and kept Rs 1 crore with himself. On regular inspection and by conducting enquiries of the brokers involved, Securities and Exchange Board of India (SEBI) was able to detect this irregularity. The SEBI imposed a heavy penalty on Mr. Sanjay Nehra.

By quoting the lines from the above para identify and state any two functions that were performed by SEBI in the above case.

Mr. Vikas Mehra was the Chairman of 'IBM Bank'. The Bank was earning good profits. Shareholders were happy as the bank was paying regular dividends. The market price of their shares was also steadily rising. The bank was about to announce the taking over of 'UK Bank'. Mr. Vikas Mehra knew that the share price of 'IBM Bank' would rise on this announcement. Being a part of the Bank, he was not allowed to buy shares of the bank. He called one of his rich friends Mukand and asked him to invest Rs 4 crores in shares of his bank promising him the capital gains. As expected after the announcement, the share prices went up by 50% and the market price of Mukand's shares was now Rs 6 crores. Mukand earned a profit of Rs 2 crores. He gave Rs 1 crore to Vikas Mehra and kept Rs 1 crore with him. On regular inspection and by conducting enquiries of the brokers involved, Securities and Exchange Board of India (SEBI) was able to detect this irregularity. SEBI imposed a heavy penalty on Vikas Mehra.

Quoting the lines from the above para identify and state any two functions performed by SEBI in the above case.

Mr. Aditya Gupta was the chairman of ‘Vandan Bank’. The Bank was earning good profits. Shareholders were happy as the bank was paying regular dividends. The market price of their shares was also steadily rising. The bank announced taking over of ‘Karur Bank’. Aditya Gupta knew that the share price of Vandan Bank would rise on this announcement. Being a part of the bank, he was not allowed to buy shares of the bank. He called one of his rich friends Nimesh and asked him to invest Rs 6 crores in the shares of his bank promising him the capital gain.

As expected, the share prices went up by 40% and the market price of Nimesh’s shares was now Rs 8.4 crores. He had earned a profit of Rs 2.4 crores. He gave Rs 1.2 crore to Mr. Aditya Gupta and kept Rs 1.2 crore with him. On regular inspection and by conducting enquiries of the brokers involved, Securities and Exchange Board of India (SEBI) was able to detect this irregularity. SEBI imposed a heavy penalty on Aditya Gupta. By quoting the lines from the above para identify and state any two functions that were performed by SEBI in the above case.

State any four methods of floatation of new issues in the primary market.

‘Zaira Ltd.’ is a large and creditworthy company manufacturing air-conditioned buses for the Indian market. It now wants to export these buses to other countries and decides to invest in new hi-tech machines. Since the investment is large, it requires long-term finance. It decides to raise funds by issuing equity shares. The issue of equity shares involves huge floatation cost. To meet the expenses of floatation cost, the company decides to tap the money market.
a. Name and explain the money market instrument the company can use for the
above purpose.
b. What is the duration for which the company can get funds through this instrument?
c. State any other purpose for which this instrument can be used.

Differentiate between `capital-market' and 'money-market' on the following basis:

Liquidity

Differentiate between ‘primary market’ and ‘secondary market’ on any five basis.

State any three Development functions of Securities and Exchange Board of India.

State any five regulatory functions of the Securities and Exchange Board of India.

'Due to various malpractices and multiplied investors grievances the Govt. of India decided to set up a separate regulatory body to protect the interest of investors and to regulate the securities market.'

1. Identify the regulatory body set up by Govt. of India for the above-stated purpose.
2. State any one objective of the regulatory body identified in (a) above.

Explain 'Private Placement' and 'Rights Issue' as methods of floatation of new issues in the primary market.

'Gujarat Textiles Ltd.' needs to raise a fund of ₹80 crores. It cannot afford the cost of a public issue, so it was decided to allot its equity shares to institutional investors like LIC and some selected investors.

Identify and explain the method of floating new issues used by 'Gujarat Textiles Ltd.'

Which of the following is not a function of Securities and Exchange Board of India (SEBI)?

Which of the following statements is Not true for primary market?