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Bmsf 326:Portfolio Planning And Management Question Paper

Bmsf 326:Portfolio Planning And Management

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2011

KENYA METHODIST UNIVERSITY

END OF 3''RD ''TRIMESTER 2011 EXAMINATIONS
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : BUSINESS ADMINISTRATION
UNIT CODE : BSMF 326
UNIT TITLE : PORTFOLIO PLANNING & MANAGEMENT

TIME: 2 HOURS

Instructions: Answer Question ONE and any other TWO Questions.

Question One

Discuss the THREE types of loans.

(6 Marks)

Equity bank received a loan application from a regular customer, Mumias sugar Ltd worth Kshs. 10 million. The banks credit manager has however discovered that he does not have adequate funds and thus has decided to source for funds by issuing certificates of deposits with 3.5% interest and also raise interest on deposit (savings account) from 3% to 5%. These activities are expected to provide the manager with the required are expected to provide the manager with the required funds necessary for lending. The operating costs of processing the loan is estimating to be Ksh. 500,000 and the banks actuarist recommends a Kshs. 300,000 premium for possible default on loan. If the bank requires a 2% profit margin on corporate loans assist the manager to arrive at the price for the Kshs. 10 million loan using cost plus pricing model.

(12 Marks)

Discuss any THREE microfinance related reasons that may cause non-payment of loans.

(6 Marks)

Discuss any THREE categories of loans.

(6 Marks)

Question Two

Baraka microfinance has been struggling to reach its 500,000 clientele target. The have decided to hire you. A KeMU-microfinance students in one of their local banks to assist in outreach and promotion as well as be involved in the lending process.

Discuss the methods that you would use to recruit new clients so as to facilitate the achieving of the target.

(10 Marks)

Highlight the information that they will need to capture in the loan application form.

((5 Marks)

Give 5 reasons why the MFI should use the SCs of borrowing in loan analysis.

(10 Marks)

Question Three
Discuss the EIGHT stages of loan process.

(8 Marks)

Explain any FOUR types of collaterals that can be used as security when borrowing.

(8 Marks)

Discuss how banking institutions manage credit.

(4 Marks)

Question Four
Microfinance institutions have become extremely aggressive in the marketing of their products and services. This means that they have to adopt those methods that are affordable and convenient for the client. Discuss the methods that can be adopted by a microfinance institution. (20 Marks)

Bmsf 326:Portfolio Planning And Management Question Paper

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