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Bcom 430: Management Of Financial Institutions Question Paper

Bcom 430: Management Of Financial Institutions 

Course:Bachelor Of Commerce

Institution: Chuka University question papers

Exam Year:2013





CHUKA

UNIVERSITY

UNIVERSITY EXAMINATIONS
FOURTH YEAR EXAMINATIONS FOR THE AWARD OF DEGREE OF BACHELOR OF COMMERCE
BCOM 430: MANAGEMENT OF FINANCIAL INSTITUTIONS
STREAMS: BCOM Y4S1 TIME: 2 HOURS
DAY/DATE: MONDAY 22/4/2013 2.30 PM – 4.30 PM
INSTRUCTIONS:

Answer Question ONE and any other TWO Questions
Show all your workings
Do not write on the question paper.

QUESTION ONE

(a) With relevant examples, discuss the roles of financial institutions regulators to the
economies of developing countries like Kenya . Justify the rationale behind the regulation of financial institutions and markets. [15 Marks]

(b) State and briefly discuss FIVE benefits of a demutualised Nairobi Stock Exchange. [5 Marks]
(c) Assume the book value of assets of a certain bank ABC are as follows:

Book Value
Assets (Millions)
Government Treasury Bills 200
Obligation Bonds 100
Mortgages 400
Commercial Loans 300
Total Book Value 1000
Also, you are given credit risk classification as 0%, 20%, 50%, and 100% respectively. Assuming that Tier 1 capital requirement is 8% of the book value of assets and the minimum total capital requirement is 16% of the risk weighed assets, determine the following giving managerial comments.

(i) The risk weighted assets. [4 Marks]

(ii) Minimum core capital requirement [3 Marks]

(iii) Minimum total capital requirements. [3 Marks]

QUESTION TWO

(a) “The core mandate of Bank Supervision Department (BSD) is to foster liquidity,
solvency and proper functioning of a stable market-based financial system as stipulated under Section 4(2) of the Central Bank of Kenya Act”. Discuss. [10 Marks]

(b) In the recent past, we have experienced falling of indigenous financial institutions in Kenya. Explain why the investment banks and insurance companies have been falling and suggest possible solutions to these problems. [10 Marks]

QUESTION THREE

(a) Financial institutions face a myriad of risks during their operations. Using examples discuss FIVE types of these risks and suggest their possible solutions. [10 Marks]

(b) Discuss the regulatory functions of the Capital Market Authority as provided by the Act and the regulations. Give examples. [10 Marks]

QUESTION FOUR

(a) There are various financial centres of East and Southern Africa. Discuss how these institutions can help the Kenyan economy achieve its vision 2030. [10 Marks]

(b) Using examples discuss how financial institutions in Kenya are addressing governance issues. [10 Marks]

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