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Hbc 2205: Financial Institutions And Markets Question Paper

Hbc 2205: Financial Institutions And Markets

Course:Bachelor Of Commerce

Institution: Dedan Kimathi University Of Technology question papers

Exam Year:2012

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DEDAN KIMATHI UNIVERSITY OF TECHNOLOGY
UNIVERSITY EXAMINATION 2010/2011
THIRD YEAR FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
HBC 2205: FINANCIAL INSTITUTIONS AND MARKETS
DATE: 16TH AUGUST 2012 TIME: 8.30 AM – 10.30 AM
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Instructions: Answer Question One and Any Other Two Questions
QUESTION ONE
a) A central bank is a commercial bank which is responsible of economic stability and financial soundness of a given economy. Explain clearly the main roles of central Bank of Kenya? 9 marks
b) Cooperatives are very important in rural and urban development in Kenya. They are formed by members to serve the members interests. Explain the main roles of saving and credit cooperative societies in Kenya? 10 marks
c) Define euro markets and explain clearly 4 instruments used in the euro markets?
11 marks
QUESTION TWO
a) Working capital management refers to the administration of all aspects of current assets and current liabilities. Explain clearly the dangers of holding excessive working capital and inadequate working capital? 9 marks
b) Explain the advantages and disadvantages of cash budgeting? 11 marks
QUESTION THREE
a) Foreign exchange markets is the mechanism by which buyers and sellers of currencies are able to meet their foreign currency requirements. Differentiate between spot exchange rate and forward exchange rate transaction with a clear example?
4 marks
b) Assume a foreign currency (F) is quoted against sterling pound as follows
Spot rate one sterling pound: F 2156-2166
3 months forward One sterling pound: F 2207-2222
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Required:
Determine the amount of sterling pound required to buy(bank sells) 2 million foreign currency(F)
i) at spot rate
ii) 3 months forward 4 marks
Compute amount of sterling pound one would get if he was to sell (bank buys) 2 million of foreign currency
i) at spot rate
ii) 3 month time under the forward exchange rate contract 4 marks
c) Explain the benefits of swaps to a company? 8 marks
QUESTION FOUR
a) Explain the challenges facing the firms involved in multinational operations?
10 marks
b) Discuss the services offered by the capital market? 10 marks
QUESTION FIVE
a) Identify the four types of bonds and explain how each is used 8 marks
b) Explain types/scope of financial engineering 3 marks
c) The miller, Silber and Van Horne papers suggest the factors responsible for financial innovation. Explain the factors clearly? 9 marks

Hbc 2205: Financial Institutions And Markets Question Paper

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