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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: 2009/2010
THIRD YEAR STAGE 1 EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CFM 301: DEVELOPMENT FINANCE (SUNDAY CLASS)
DATE: DECEMBER 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer Question ONE and Any other TWO Questions
QUESTION ONE
a) Explain the role of secondary markets on primary markets [3 Mark]
b) Explain any four criteria for measuring efficiency of a financial system [8 Mark]
c) Its widely argued that financial systems facilitate the trading, hedging, diversifying, and
pooling of risk. Explain why and how this occurs [10 Mark]
d) Explain the two main problems that affect the a allocative efficiency of financial institutions
[4 Mark]
e) Outline the steps of undertaking Development Impact Analysis for a development project
[5 Mark]
QUESTION TWO
a) Poor microfinance clients should not pay the full cost on their tiny loans. They should instead
be subsidized. Do you agree? [10 Mark]
b) Well functioning or efficient markets are characterized by investments with high expected
returns and high levels of risk. Explain any four characteristics of efficient security markets
[10 Mark]
2
QUESTION THREE
a) Explain why equity finance is a major source of information asymmetry problems
compared to debt finance [10 Mark]
b) Explain how Governments can help mitigate information asymmetry problems in security
markets [10 Mark]
QUESTION FOUR
Define financial infrastructure and candidly explain any three of its components or pillars [20 Mark]
QUESTION FIVE
a) Serving the rural poor is a high-risk, high-cost proposition for banks. This is why most banks
don’t want to serve the rural poor. Validate this statement [15 Mark]
b) With the help of an illustration, explain the venture capital investment process [5 Mark]

Cfm 301: Development Finance Question Paper

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