2020 nmims assignments Money market is essentially a mark

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Financial Institutions and Markets

1. Mr. Rajeev Mehta was the Chairman of Topaz Bank. The bank was earning fairly well and shareholders were receiving regular dividends. The market price of their shares was performing well. The bank was about to announce taking over the AME Bank. Mr. Rajeev Mehta expected that the market share of their bank would rise once the takeover is announced in the public. Being a part of the bank, Rajeev was not allowed to buy shares of Topaz bank. He called one of his wealthy friend Rashid 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 Rashid s shares was now ? 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, the Securities and Exchange Board of India (SEBI) was able to detect this irregularity. The SEBI imposed a heavy penalty on Rajeev Mehta. In context to the above situation identify and elaborate the functions that were performed by SEBI (10 Marks)

2. Money market is essentially a market for short-term funds . In the light of this statement elaborate on the money market and its features. (10 Marks)

3. Mr. Kumar wants to invest his saving in mutual funds. However, he is completely unfamiliar how to go about it. He approaches you, a wealth advisor in the bank where he holds his savings account.

a. Explain him the basics of mutual fund and describe any five kinds of mutual funds which are available in the market. (5 Marks)

b. Enumerate the advantage and disadvantages associated with investing in the mutual fund.

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