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Financial Institutions And Markets Question Paper

Financial Institutions And Markets

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2010

UNIVERSITY EXAMINATIONS: 2009/2010
THIRD YEAR STAGE 2 EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CFM 309: FINANCIAL INSTITUTIONS AND MARKETS (SUNDAY)
DATE: APRIL 2010 TIME: 2 HOURS
INSTRUCTIONS: Answer Question ONE and Any other TWO Questions
QUESTION ONE
a) Discuss how exchange traded funds (ETF’s) and global deposit receipts (GDR’s) improve
investment opportunities in financial Markets
(10 Marks)
b) Explain the concept of financial sector deepening (FSD) and discuss how information and
communication technology (ICT) sub sector of the Kenyan economy has been useful in this
process
(10 Marks)
c) Discuss the usefulness of stock indices in the financial Markets and outline the limitations that
have been noted on the NSE 20 share index
(10 Marks)
QUESTION TWO:
a) State and explain five reasons that have supported the rapid growth of the Kenyan microfinance
sector
(10 Marks)
b) With respect to fixed income securities Markets (FISM’s), discuss the concepts of information
asymmetry, moral hazard and adverse selection
(10 Marks)
2
QUESTION THREE:
a) Clearly state and explain five functions of the financial system
(10 Marks)
b) Discuss the main functions and limitations of development financial institutions in Kenya
(10 Marks)
QUESTION FOUR:
a) Distinguish commercial papers from Banker’s acceptances and explain the benefits that accrue
to the issuers and investors in Commercial papers and Bankers Acceptances
(10 Marks)
b) Discuss how the Kenyan Government can utilize the microfinance industry to enhance the
attainment of vision 2030
(10 Marks)
QUESTION FIVE:
a) State and discuss the objectives of the International finance corporation while outlining the
various activities they engage in to attain these objectives
(10 Marks)
b) Discuss and distinguish the preferred habitat theory and the Market segmentation theory of
term interest rates
(10 Marks)

Financial Institutions And Markets Question Paper

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