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Cfm 309: Financial Institutions And Markets Question Paper

Cfm 309: Financial Institutions And Markets

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2009

1
UNIVERSITY EXAMINATIONS: 2008/2009
THIRD YEAR STAGE II EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CFM 309: FINANCIAL INSTITUTIONS AND MARKETS
DATE: AUGUST 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer question ONE and any other TWO questions
QUESTION ONE
a) Distinguish between money market and capital market (4 marks)
b) Describe the three steps of constructing the stock market index (6 marks)
c) Write short notes on the following:
i.) Financial innovation (2 marks)
ii.) Watered capital (2 marks)
iii.) International monetary fund (2 marks)
iv.) Capital market authority(CMA) (2 marks)
d) State any four causes financial uncertainty in international trade? (4 marks)
e) Compare and contrast forward contract and futures contract. (4 marks)
f) State and explain any two ways in which a government may exercise credit control
(4 marks)
QUESTION TWO
a) What are the practical difficulties of a small-scale enterprise wishing to obtain credit to
expand production? (10 marks)
b) Explain the extent to which institutions such as Kenya Industrial Estate ( K.I.E) and
Industrial and Commercial Development Corporation (ICDC) can help in reducing some of
the difficulties in (a) above (10 marks)
2
QUESTION THREE
a) Describe any four reasons behind low quotation of companies in the NSE? (8 marks)
b) Identify four incentives the government has given companies to induce them to go public
(8 marks)
c) Clearly distinguish between Gold currency standard and Paper currency standard
(4 marks)
QUESTION FOUR
a) Discuss any five factors responsible for rapid development of financial institutions in Kenya
(10 marks)
b)
i.) What is financial sector development? (2 marks)
ii.) State any five indicators of financial sector development (5 marks)
iii.) Differentiate between financial markets and financial instruments giving one example in
each case. (3 marks)
QUESTION FIVE
a) The Nairobi Stock Exchange (NSE) has contributed to Kenya’s economic growth. Discuss
(10 marks)
b) Briefly outline the major problems faced by investors in making foreign investment decisions.
What are the major sources of financing for such investments (10 marks)

Cfm 309: Financial Institutions And Markets Question Paper

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