FS & Capital Market — Repeated Concepts for CA Students
This consolidated reference sheet structures repeated examination questions and high-frequency concepts from the Financial Services and Capital Market domain. Content has been normalized for clarity and assessment readiness.
A. Definitions and Concept Identification
| Concept Cue | Correct Response | Notes |
|---|
| QIB purchasing shares 1 day before IPO opens | Anchor Investor | Pre-IPO allocation mechanism |
| Bond with early principal repayment option | Putable Bond | Investor-friendly protection |
| Least preferred PE exit route | Liquidation | Value destructive |
| Supporter of blank cheque companies | Institutional Investor | SPAC-type environment |
| Collects investor applications | Registrar & Transfer Agent (RTA) | Operational intermediation |
| MIBOR calculated by | NSEIL | Benchmark rate computation |
| Platform for mass investment into startups | Crowd Funding | Alternative financing |
| Zero-debt company reference | NMCE | Balance sheet characteristic |
| Black box trading | Algorithmic Trading | Automated execution |
| Primary subscription requirement | 90% subscription | SEBI issue norms |
| Certificate of Deposit issued by | Banks | Money market instrument |
| Commercial Paper issued by | Corporates | Short-term unsecured instrument |
| Successful PE exit strategy | IPO Exit | Maximizes valuation |
| MCX crude oil contract lot | 100 barrels | Contract standardization |
| Reverse Repo meaning | Banks lend to RBI | Monetary policy tool |
| Crowdfunding participant base | Large number of small investors | Startup financing |
| Credit score “B” | High Risk | Rating-default linkage |
| Mumbai Interbank Overnight Rate calculator | CCIL | Market infrastructure |
| Endowment Fund users | University NPO Church Hospital | Long-term corpus deployment |
B. Regulatory Limits and Compliance
| Topic | Threshold / Rule |
|---|
| Private Placement count | 50 to max 200 persons |
| Underwriter commitment honour period | 60 days from closure |
| Issue subscription list duration | Minimum 3 days |
| Money market MF lock-in | 46 days |
| NPO fund-raising mechanism | Social Stock Exchange |
| Revenue BBP tender period | T+3 to T+5 days |
C. Capital Market Intermediaries
| Role | Description |
|---|
| Investment Banker | Issue structuring. Book building. Placement |
| RTA | Application processing. Record maintenance |
| Clearing House | Settlement guarantee. Margining |
| FEDAI | FX market standards and rules |
| FIMMDA | Benchmarking in debt and money markets |
| Debenture Trustee | Bondholder protection |
| Merchant Banker | Capital raising intermediation |
Not an intermediary: Venture Capitalist (classified as investor not facilitator)
D. Private Equity and Venture Capital Concepts
- Exit strategies: IPO. Strategic Sale. Secondary Sale. Liquidation
- Partners: GP manages. LP contributes capital
- Term Sheet: Non-binding investment document
- Anti-dilution categories: Full-ratchet. Narrow-weighted. Broad-weighted
- Endowment Funds: Long-term corpus for institutions
Anti-dilution answer key: Full-ratchet → adjusts conversion price to new lower issuance price
E. Leasing and Factoring
| Concept | Definition |
|---|
| Full Factoring | Old line factoring model |
| Cross-border Factoring | Two-factor system |
| Operating Lease | Right of control remains with lessee |
| Forfaiting | Non-recourse purchase of export receivables |
| CAMEL | Capital. Asset. Management. Earnings. Liquidity |
F. Credit and Fixed Income
- Stable ratings reduce transition volatility
- Lower ratings indicate higher default probability
- Zero coupon bonds issued at discount
- Not a CRA: CIBIL (credit bureau)
G. Equity Issue and Market Mechanics
- Red Herring Prospectus → price or quantity pending
- Book Building → price discovery mechanism
- Rebalancing → index constituent adjustments
- Basket Trading → portfolio-based execution
- Promoter Contribution → subject to lock-ins
H. Formula Bank
| Topic | Formula |
|---|
| Annualised Yield | (TP − LP) ÷ LP × (365 ÷ Days) × 100 |
| T-Bill | (S − P) ÷ P × (365 or 360 basis) × 100 |
| Sharpe Ratio | (Rp − Rf) ÷ σp |
| NAV | (Assets − Liabilities) ÷ Units |
I. Confirmed MCQ Answer Keys
| Question Type | Correct Answer |
|---|
| Book-built offer document | Red Herring Prospectus |
| Non-intermediary in capital market | Venture Capitalist |
| Central bank securities trades | Open Market Operations |
| Anti-dilution type | Full-ratchet |
| Reverse Repo definition | Banks lend to RBI |
| Not a CRA | CIBIL |
| Rolling Returns | All of the above |
