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Cfm 301: Development Finance Question Paper

Cfm 301: Development Finance

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2009

1
UNIVERSITY EXAMINATIONS: 2008/2009
THIRD YEAR STAGE 1 EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CFM 301: DEVELOPMENT FINANCE (EVENING CLASS)
DATE: APRIL 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer question ONE and any other TWO questions
QUESTION ONE
(a) 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]
(b) Briefly say what venture capital is and explain how Kenya can design her venture capital
industry to support rural project financing [14 Marks]
(c) Define a financial market and state any four functions of a market [8 Marks]
QUESTION TWO
Ross Levine (1996) argues in the paper “Financial development and Economic growth” that the
financial system performs five key functions. With the help of illustrations drawn from, Kenya’s
financial markets, briefly summarize the five functions as presented in this paper [20 Marks]
QUESTION THREE
(a) State and explain 4 differences that one should bear in mind when comparing
financial systems of the developing against those of the developed world [10 Marks]
(b) Define and state five functions of a market index [10 Marks]
2
QUESTION FOUR
Write brief notes on the following:
a) Primary market
b) Secondary market
c) Third market
d) Fourth market ` [20 Marks]
QUESTION FIVE
(a) Identify and explain any three financial contract risks [6 Marks]
(b) Demonstrate your understanding of the argument that poverty is multidimensional. Identify
alternative ways through which financial services can affect the multidimensional components
of poverty [14 Marks]

Cfm 301: Development Finance Question Paper

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