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Development Finance Question Paper

Development Finance

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2008

UNIVERSITY EXAMINATIONS: 2008/2009
THIRD YEAR STAGE 1 EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CFM 301: DEVELOPMENT FINANCE
DATE: DECEMBER 2008 TIME: 2 Hours
INSTRUCTIONS: Answer question ONE and any other TWO questions
QUESTION ONE
(a) Explain briefly the difference between hedging, speculation and arbitrage in the
context of derivative markets [6 Marks]
(b) Define and explain the role of financial intermediation [4 Marks]
(c) In point form, state how financial intermediaries manage to scale backwards search
costs and in general transaction costs [4 Marks]
(d) State and explain the four characteristics of financial instruments
[4 Marks]
(e) Explain the difference between the Over the Counter market (OTC) and the
Exchange Traded market and state what the bid and offer quotes imply in an OTC
market [6 Marks]
(f) State and explain 4 difference that one should bear in mind when comparing
financial systems of the developing and the developed world
[6 Marks]
2
QUESTION TWO
Write short notes on the following
(a) Financial restraint policy [5 Marks]
(b) Classes of bonds [6 Marks]
(c) Information asymmetry problems [3 Marks]
(d) Efficiency Criteria for financial systems [6 Marks]
QUESTION THREE
(a) Discuss why Microfinance (MF) needs different regulatory treatment different from
that which apply to normal banking [6 Marks]
(b) Explain how donors can use microfinance to help achieve the Millennium
Development Goals (MDGs)? [14 Marks]
QUESTION FOUR
(a) Demonstrate your understanding of the argument that poverty is multidimensional.
Identify alternative ways through which financial services can affect the
multidimensional components of poverty [12 Marks]
(b) When a borrower approaches a lender for a loan, the lender is at an information
disadvantage. The information disadvantage in turn creates two problems, one
before the loan is agreed and the other after the loan has been issued. Explain.
[8 Marks]
QUESTION FIVE
(a) Distinguish between financial structure and financial infrastructure
[4 Marks]
(b) Explain how a country can strengthen her financial infrastructure
[6 Marks]
(c) State the main difference between venture capitalists and mainstream bankers
[4 Marks]
(d) State and explain the 4 pillars of sound microfinance [6 Marks]

Development Finance Question Paper

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