Financial Markets And Institutions Question Paper

Financial Markets And Institutions

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2010

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
OPEN, DISTANCE AND E-LEARNING EXAMINATION FOR DEGREE OF
BACHELOR OF COMMERCE
BAC 305:
FINANCIAL MARKETS AND INSTITUTIONS
DATE: Saturday 24th July, 2010

TIME: 8.00 a.m – 10.00 a.m
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INSTRUCTIONS: Answer ALL THE Questions
QUESTION 1
a)
Outline the difference between debt capital and equity capital. [ 4 marks]
b)
Write short notes on warrants and convertibles. What are the reasons to have them? [ 5 marks]
c)
Why is it that only a few companies are quoted? [ 4 marks]
d)
Explain the methods of issuing shares to new markets [ 4 marks]
e)
Adidas company Quotes its shares at Kshs.100/= but has a par value of Kshs.50. At the end of the financial year 15% of its profit was given a dividend. What is the yield rate? [ 3 marks]

QUESTION 2
a)
Explain the main factors of determining interest charge on a loan. [ 4 marks]
b)
Kimtai borrowed Kshs.1,000,000 at Kenya commercial Bank to be compounded annually for 15 months at an interest rate 10%;
i)
How much interest should he pay? [ 2 marks]
ii)
What is the total amount to pay after 15 months? [ 2 marks]
c)
What are the determinants of equilibrium change of interest rate? [3 marks]
d)
Explain the various ways of managing risks on the banks in Kenya. [ 5 marks]
e)
What are the major objectives of the IMF? [ 4 marks]

QUESTION 3
a)
An instrument guaranteeing one shot payment of Kshs.10, 000 per year is less than Kshs.10,000 today. If the rate is 15% per year, what is the present value? [3 marks]
b)
What are the rationales for financial regulations by the government?[6 marks]
c)
Explain the various contribution of financial sector to the economy. [ 6 marks]

QUESTION 4
a)
Outline reasons why monetary policy used developed countries is not used in LDC’s especially in Kenya. [ 5 marks]
b)
What is a Euro market and what instruments are traded in this market? [3 marks]
c)
Outline the main challenges facing the financial sector today. [4 marks]
d)
What are the factors you consider before investing available funds? [3 marks]

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