Financial Services Very Short Answer Type Questions

Question 1.
State any two custodial services.
Answer:

Financial leasing services including equipment leasing and hire-purchase by a body corporate
Credit card services
Merchant banking services
Securities and foreign exchange (Forex) broking.

Question 2.
What is housing finance?
Answer:
Housing finance service is financial service provided by commercial works and housing finance companies to people who wish to acquire or construct houses for their residence housing finance also covers finance for the acquisition or development of plots or lands for construction of houses.

Question 3.
What is venture capital?
Answer:
Venture capital is long-term risk capital to finance high technology projects which involve risk but at the same time has strong potential for growth. Venture capitalist pools their resources including managerial abilities to assist new entrepreneur in the early years of the project. Once the project reaches the stage of profitability, they sell their equity holdings at high premium.

Question 4.
State any four fund based services.
Answer:

Venture capital
Housing finance
Factoring
Insurance

Question 5.
State any four fee based advisory services.
Answer:

Portfolio management
Corporate counseling
Loan syndication
Merger and acquisition e. credit rating

Question 6.
What is vehicle loan?
Answer:
Vehicle loan refers to getting a loan to pay for the vehicle and repaying the loan with the monthly payments. Vehicle loan can be obtained by a customer’s bank or a credit union or depending upon where we buy. In the present scenario loan for financing vehicle is available through dealership.

Question 7.
What is factoring?
Answer:
Selling of accounts receivable on a contract basis to an agency known as a factor in order to obtain cash payment before the accounts come due is termed as factoring. The factor shoulders the responsibility of credit analysis of new accounts, payments collection, and credit losses.

Question 8.
What do you mean by financial services?
Answer:
Financial Services is an expression employed to refer to the services offered by the finance industry. It can also be used to elaborate or explain organizations that deal with the management of money. Mumbai and The National Stock Exchange are examples of financial services in India.

Question 9.
What is merchant banking?
Answer:
A merchant banker is a financial intermediary who helps to transfer capital from those who possess it to those who need it. Merchant banking includes a wide range of activities such as management of customer securities, portfolio management, project counseling and appraisal, underwriting of shares and debentures, loan syndication, acting as banker for the refund orders, handling interest and dividend warrants etc.

Question 10.
Give the meaning of lease.
Answer:
A lease is an agreement under which a company or a firm acquires’a right to make use of a capital asset like machinery, on payment of a prescribed fee is called. It is very popular and nearly 25% of plant and equipment is being financed by leasing companies. In India many financial companies have started equipment leasing business.

Question 11.
What is mutual fund?
Answer:
A mutual fund refers to a fund raised by a financial service company by pooling the savings of the public. It is invested in a diversified portfolio with a view to spreading and minimizing the risk

Question 12.
What is Portfolio Management?
Answer:
The art of selecting the right investment policy for the individuals in terms of minimum risk and maximum return is called as portfolio management. Portfolio management refers to managing an individual’s investments in the form of bonds, shares, cash, mutual funds etc so that he earns the maximum profits within the stipulated time frame.

Question 13.
What is loan syndication?
Answer:
Syndicated loan is a loan provided by a group of lenders, usually commercial or investment banks. Syndicated loan deals are typically structured and administered by a lead arranger that initially underwrites the transaction and guarantees the total commitment, and later subscribes a given amount of the commitment to other banks in the syndicate.

Question 14.
What is corporate counseling?
Answer:
Corporate counseling refers to a set of activities performed to ensure the efficient running of a corporate enterprise and to improve the performance.

Question 15.
What is foreign collaboration?
Answer:
Foreign collaboration can be financial collaboration or technical collaboration in case of financial collaboration is inflow of foreign investment takes place, but in
case of technical collaboration refers to inflow of technology .franchises, patents, for which foreign partner get lump sum fee or royalty for specified period or specified rate.

Question 16.
What is fees based financial services?
Answer:
Fees based-financial services are those which are paid for a flat fee rather than s commission. Those services are known as fees based services.

Question 17.
What is capital restructuring?
Answer:
Capital restructuring is the process of reorganizing structure or combination of various debt and equity. It can be of two types namely debt and equity restructuring,

Question 18.
State any two differences between merger and acquisition.
Answer:
Merger results in combination of two or more company’s to form a new company whereas in case of acquisition formation of a new company does not takes place. Merging companies shares are surrendered and new shares are issued where as in case of acquisition acquiring company purchases the shares of old company.

Question 19.
What is forfeiting?
Answer:
Forfeiting is a facility offered by importer’s bank where the bank purchases the – receivables from the exporter and grants finance and later collect from the importer along with the interest.

Question 20.
What is fund based financial services?
Answer:
Fund based or asset based financial services are those services which are rendered for commission basis or for a certain amount of interest.

Question 21.
State any two institutions providing housing loan in India.
Answer:

Industrial development bank of India
HUDCO
State bank of India and its subsdiaries
Tata Home finance

Question 22.
What is consumer finance.
Answer:
Banks provides loans to meet essentials of its consumers. It is called as consumer financing types of consumer finiance are Home loan, MOrtagage loan education loan, car loan etc.