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Cfm 305-F: Treasury Management Question Paper

Cfm 305-F: Treasury Management

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2009

1
UNIVERSITY EXAMINATIONS: 2009/2010
SECOND YEAR STAGE II EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CFM 305-F: TREASURY MANAGEMENT
DATE: DECEMBER 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer Question ONE and any other TWO questions
QUESTION ONE (30 MARKS)
a) What is the role of a financial manager? (5 Marks)
b) Explain financial functions. (5 Marks)
c) What is a financial market? How are financial markets differentiated from markets for
physical assets? (5 Marks)
d) Differentiate between a primary market and secondary market. (5 Marks)
e) Securities can be traded on organized exchange or in the over-the-counter market. Define each of
these markets and describe how stocks are traded in each of them. (10 Marks)
QUESTION TWO (20 MARKS)
Evaluate the role played in a financial crisis by lender of last resort (LOLR) function of the central
bank. (20 Marks)
QUESTION THREE (20 MARKS)
Evaluate the major factors that must be considered by a large corporation when raising finance using
the following instruments:
2
i). Equities (5 Marks)
ii). Bonds (5 Marks)
iii). Commercial paper (5 Marks)
iv). Bank finance (5 Marks)
QUESTION FOUR (20 MARKS)
a) Outline the advantages and disadvantages of a variable rate, fixed rate and capped rate mortgage
for the borrower. (10 Marks)
b) Why would a sudden fall in the US stock exchange cause a rise in the premiums of both dollar put
and dollar call currency options? (10 Marks)
QUESTION FIVE (20 MARKS)
Discuss the criteria used by a credit rating agency when assessing the credit quality of bonds.
(20 Marks)

Cfm 305-F: Treasury Management Question Paper

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