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Din 202: Risk Management Question Paper
Din 202: Risk Management
Course:Bachelor Of Commerce
Institution: University Of Nairobi question papers
Exam Year:2013
UNIVERSITY OF NAIROBI
MODULE II DEGREE PROGRAMME-2012/2013
(NAIROBI- DAY)
SECOND YEAR EXAMINATIONS FOR THE DEGREE OF BACHELOR OF COMMERCE
DIN 202: RISK MANAGEMENT
DATE: MAY 8, 2013 TIME: 2.00P.M.- 4.00P.M.
INSTRUCTIONS
Question ONE is compulsory
Answer any other THREE questions.
1. The proprietor of a nursing home in Oyugis town wishes to expand the facility by putting up a branch in Kadongo. She believes that the new nursing home should either be a 30 bed, 50 bed or 70 bed in size. if she put up a 30 bed facility and demand is low, medium and high, her return will be Kshs.300,000, Kshs350,000 and Kshs.400,000 respectively. If demand is high, medium and low and she puts up a 70 bed facility, her return will be Kshs.750,000, Kshs.100,000 and Kshs.400,000 respectively. While if she put up a 50 bed facility, and demand is low, medium and high, she earns Kshs.200,000, Kshs.500,000 and Kshs.550,000 respectively. The earnings are per month. She strongly believes that the chance of low, medium and high demand is 0.1, 0.4 and 0.5 respectively.
Required:
a) Determine the optimal act if the investor is a pessimist. Show your working. (10 marks)
b) Determine the optimal act if the investor is an optimist. Show your working. (10 marks)
c) Supposing a consultant is hired to confirm the actual level of demand and establishes that the prediction of the investor is indeed true. How much in Ksxhs. should the consultant be paid? Show your working. (10 marks)
d) Outline the key functions of the Risk manager in a business enterprise in Kenya. (10 marks)
2. Highlight FOUR indirect burdens of risk in a business enterprise. (20 marks)
3. Describe FOUR major credit related risks giving an example of each from business enterprise in Kenya. (20 marks)
4. i) Differentiate between risk management policy and risk management manual. (10 marks)
ii) How does risk financing support risk control? Give FOUR examples to illustrate. (10 marks)
5. Explain the need for review of the risk management programs with specific reference to kenyan business enterprise. (20 marks)
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