Finance

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No matter how efficiently goods / services are produced, if

they cannot be delivered to the customer in the quickest
possible time it is vain.
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The Government of Indian First phase 14 Nationalized banks:

1. Bank of India
2. Union Bank of India
3. Bank of Baroda
4. Bank of Maharashtra
5. Punjab National Bank
6. Indian Bank
7. Indian Overseas Bank
8. Central Bank of India
9. Canara Bank
10. Syndicate Bank
11. United Commercial Bank
12. Allahabad Bank
13. United Bank of India
14. Dena Bank
2nd phase 6 banks in 80s

1. Andhra Bank
2. Corporation Bank
3 New Bank of India
4. Oriental Bank of Commerce
5. Punjab and Sindh Bank
6. Vijaya Bank
Who s senior?
The bondholder is always more senior. Stockholders (including those who own
preferred stock) must wait until bondholders are paid during a bankruptcy before
claiming company assets.
4. why buy preffered stock?
An investor that wants the upside potential of equity but wants to minimize risk would
buy preferred stock. The investor would receive steady interest-like payments
(dividends) from the preferred stock that are more assured than the dividends from
common stock. (2.) The preferred stock owner gets a superior right to the company's
assets should the company go bankrupt. (3.) A corporation would invest in preferred
stock because the dividends on preferred stock are taxed at a lower rate than the
interest rates on bonds.
5. debenture?
A Debenture is " A certificate of agreement of loans which is given under the company's
stamp and carries an undertaking that the debenture holder will get a fixed return and
the principal amount whenever the debenture matures.
6. call option
Calls give the buyer the right but not the obligation to buy a gi ven quantity of the
underlying asset, at a given price on or before a given future date.
7. qualities for investment banking career?
. Make sure that you put across the point that being good with numbers, being in the
knowledge of current and past market status, and having a good financial strategy that
is unfailing are some of the most important qualities for a career in investment making.
8. 1 rupee signed by governor...who othr hav rights for it?
as rupess is the currency of our country and only govt has

the authority to issue indian currency it has been signed
by ministry of finance, all other notes are bearer notes
which are signed by governor.
no interference by rbi.
9. beta?
A measure of the volatility, or systematic risk, of a security or a portfolio in comparison

to the market as a whole.
It is the sensitivity of the asset with regards to its market.

Say, if it is 2..that means if market go up by 5%, that asset will go up by 10%, it can
even be negative, which is known as negative corelated,where asset will perform
inverse to that of market.
10. demat account
Demat means Dematerialisation of share, in simple it is an

account with which a person can trade in security market
without which a person cannot buy or sell any share in
security market.
11. treasury bill
Treasury Bills are money market instruments to finance the short term requirements of
the Government of India. These are discounted securities and thus are issued at a
discount to face value.
A Treasury Bill (known as T-Bill) is an instrument of money market, used to finance

short term requirements of Government of a country. A T-Bill is issued at a rate lower
than the Face value, and redeemed at Face value on maturity, this difference is the
rate of interest on T-Bill. This rate of interest is called Risk free Rate of the country.
12. financial forecasting
First I will review the previous year's financial

statements to get an Idea about the financial operations.
Then will discuss with the management about the current
year's targets (viz. sales / services) & their growth
expectations. Based on that will prepare provisional P&L
acct & Balance sheet. I also will check whether there is
any posibility in cost cutting and make the adjustments
accordingly to arrive at expected profit.
Initial cash inflow & outflow would be prepared based on forecasted revenue &
expenditure, month on month variance of actual vs projected would be analyised for
immediate corrective action & also for future use as same would be used as historical
trend.
13. entry for depreciation
Depreciation Account Dr
Accumulated Depreciation Account Cr
14. why issue stock rather den debt to fund it operations?
There are several reasons for a company to issue stock rather than debt. The first is if
it believes its stock price is inflated, and it can raise money (on very good terms) by
issuing stock. The second is when the projects for which the money is being rai sed may
not generate predictable cash flows in the immediate future. A simple example of this
is a startup company. The owners of startups generally will issue stock rather than take
on debt because their ventures will probably not generate predictable cash flows, which
is needed to make regular debt payments, and also so that the risk of the venture is
diffused among the company's shareholders. A third reason for a company to raise
money by selling equity is if it wants to change its debt-to-equity ratio. This ratio in
part determines a company's bond rating. If a company's bond rating is poor becaus e it
is struggling with large debts, they may decide to issue equity to pay down the debt.
According to me,the sprit of writer may be right but explanation is wrong.in second
point he explaned that company raise funds by equity because venture is not able to
generate enough funds to make regular debt payments but in this case shareholders or
venture capitalist will also not invest in that company which is not profitable as
shareholders expectations of return are generally higher than creditors as they bear
higher risk.Even a businessman will not like to do a business wich is not profitable
instead he will park his money somewhere else.
The main reasons for raising funds through equity are: -
1.When project is long term in nature and payback period is high.
2.When company is already debt laden then it will not be very easy to raise debt or it
will be costly,it will be better to raise equity to balance risk level.
15. mutual funds provide 50% returns last yr,will u invest in it?
×ou should look for more information, as past performance is not necessarily an
indicator of future results. How has the overall market done? How did it do in the years
before? Why did it give 50% returns last year? Can that strategy be expected to work
continuously over the next five to 10 years? ×ou need to look for answers to these
questions before making a decision.
I would also look what is the risk that was involved in grtting this returna and whether
my risk appetite matches with it or not.Another thing i would look at is the
diversification among different sectors or not.And last but not the least we can not
predict exactly whether the mutual fund will give the exact return in all the kinds of
market.
16. discount cash flow investment?
The DCF for an investment is calculated by estimating: the cash that you will have to
pay out, and the cash which you expect to receive back. The timeframes that you
expect to receive the payments must also be estimated. Each cash transaction must
then be recalculated, by subtracting the opportunity cost of capital between now and
the moment when you will pay or receive the cash.
Those cash flows which has considering the time factors of money in respect on cost of
capital is know as discounted cash flow...
17. EFT?
EFT is short for Electronic Funds Transfer. An EFT is a method of transferring money
from one bank account directly to another account without any paper money actually
changing hands. The two accounts do not have to be in the same bank.
18. diff btw ledger n journal
A journal is also called as a book of prime entry.

transactions occurred are first entered in this book to show
which accounts should be debited and which should be credited.
on the basis of entries made in the journal, accounts are

prepared, the book which contains the accounts is called a
ledger. transactions entered in the journal are classified
according to their nature and posted in their respective
accounts in ledger. it is also called as book of final entry.
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Asset created by an accounting entry (and included under assets in the balance
sheet) that has no tangible existence or realizable value but represents actual cash
expenditure. The purpose of creating a fictitious asset is to account for expenses
(such as those incurred in starting a business) that cannot be placed under any
normal account heading. Fictitious assets are written off as soon as possible against
the firm's earnings
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In double entry bookkeeping , aggregate of all debit and credit balances at the
end of an accounting period that (1) shows if the general ledger is in balance
(total debits equal total credits) before making closing entries, (2) serves as a
worksheet for making closing entries, and (3) provides the basis for making
draft financial statements.

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1. Accounting: (1) Combining assets, equity, liabilities and operating accounts
of a parent firm and its subsidiaries into one financial statement. See also
consolidated financial statement . (2) Combining two or more firms through
purchase, merger, or ownership transfer to form a new firm.
2. Banking: Paying off two or more old loans with a new loan. See also
consolidation loan .
3. Law: Combining two actions (involving the same parties and the same
issues) into one action on court orders. Consolidation may or may not result
in a single judgment.
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Buyer-generated document that authorizes a purchase transaction. It sets
forth the descriptions, quantities, prices, discounts, payment terms, date of
performance or shipment, other associated terms and conditions, and
identifies a specific seller. When accepted by the seller, it becomes a contract
binding on both parties. Also called order.
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A person or organization which extends credit to others.
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Operating Cash Flow compares the difference between

reported Operating or Net Income and actual cash flows
of the company. If a company does not have sufficient
cash resources set aside to pay off its Current
Liabilities, then this shows a sign of inefficiency or
problems with inventory turnover (goods not getting
sold). A healthy company is one where inventory is
turned over at industry standard rate and one where
there's enough cash in the bank to meet both short term
and long term debt obligations. Operating Cash Flow
therefore checks the quality of a company's reported
earnings.
Operating Cash Flow is also known as "Cash Flow

Provided by Operations" or "Cash Flow from Operating
Activities."
The formula for Operating Cash Flow is:
(Earnings Before Interest & Taxes + Depreciation) -

Income Taxes

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È Interest is the additional

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borrowings(loan),, where the
mark up is the additional amount
added to the cost of a product
or service,, to reach a selling
price and thereby to earn a
profit
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7 and borrowed funds. Financial
leverage refers to the ratio
between the two.A highly
leveraged company is one which
has large borrowings in
relation to owned capital
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È Bonds and Debentures are debt

7 instruments. The borrower (may
be a Company ) issues the Bond or
Debenture as the case may
giving details of the interest to
be paid and the period of
the loan, and how the loan will
be repaid. There are
different types of bonds &
debentures. When u buy a bond or
debenture u become a creditor to
the company.thats it..
Share is equity participation in

the Company. When u buy a
share, u become a shareholder of
the company. The company
will pay u dividend on the shares
held by you (share of your
profit in the company is called
dividend).however there r
different types in shares again..
Deposits are like any bank

deposit. Interest is paid in
various ways on the deposits...
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What are financial appliances which cost and price originate from the assessment
of assets underlying them called as? ANS: DERIVATIVES
Define a word investment that has taken out exclusively to diminish or abandon
out the threat in another investment? ANS:HEDGE
There is good word in financial that mean union or blender of either one or more
companies with another or the two or more companies to form one company.
What is that word? ANS: AMALGAMATION
Define a word that refers to a variety of schemes of contributing an equity
venture by a Company to its employees? ANS: ESOPs

What do you mean by Risk?
Future uncertainity

What is the Service TAX?
As on 31 st July, 2010, 117 services are

in India.0 3
30 3

9;J 2BBE
3< -3 ' 03=
3 3

What is the actual meaning of BCTT or Banking Cash Transaction TAX?

"banking cash transaction tax" means tax leviable on the taxable banking
transactions under the provisions of this Chapter .(1) This Chapter extends to the
whole of India except the State of Jammu and Kashmir.
(2) It shall come into force on the 1st day of June, 2005.
(3) It shall apply to taxable banking transactions entered into on o r after the
commencement of this Chapter

What is FBT or Fringe Benefit Tax?
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What do you mean by STT and full form of it?
Securities Transaction Tax (STT) is a tax being levied on all transactions done on
thestock exchanges.Securities Transaction Tax is applicable on purchase or sale
of equity shares, derivatives, equity oriented funds and equity oriented Mutual
Funds.
Current STT on purchase or sell of an equity share is 0.075%.
Differ between nominal money and real money?

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Difference types of Insurances?
Health,life,property,
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c 

No matter how efficiently goods / services are produced, if

 #    %&

The Government of Indian First phase 14 Nationalized banks:

2nd phase 6 banks in 80s

4. why buy preffered stock?

7. qualities for investment banking career?

8. 1 rupee signed by governor...who othr hav rights for it?

as rupess is the currency of our country and only govt has

A measure of the volatility, or systematic risk, of a security or a portfolio in comparison

It is the sensitivity of the asset with regards to its market.

10. demat account

Demat means Dematerialisation of share, in simple it is an

11. treasury bill

A Treasury Bill (known as T-Bill) is an instrument of money market, used to finance

First I will review the previous year's financial

13. entry for depreciation

14. why issue stock rather den debt to fund it operations?

16. discount cash flow investment?

18. diff btw ledger n journal

A journal is also called as a book of prime entry.

on the basis of entries made in the journal, accounts are

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 c   c '

Operating Cash Flow compares the difference between

Operating Cash Flow is also known as "Cash Flow

The formula for Operating Cash Flow is:

(Earnings Before Interest & Taxes + Depreciation) -

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È  Amortization A/C Dr

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È  Interest is the additional

È  Capital consists of own funds

c   c '

È  Bonds and Debentures are debt

Share is equity participation in

Deposits are like any bank

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As on 31 st July, 2010, 117 services are

What is the actual meaning of BCTT or Banking Cash Transaction TAX?

Differ between nominal money and real money?

L MJ

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