Markets And Institutions Question Paper

Markets And Institutions

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2010

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2010/2011
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
BAC 305: MARKETING AND INSTITUTIONS

DATE: WEDNESDAY 24TH NOVEMBER 2010 TIME: 2.00 P.M- 4.00P.M
________________________________________________________________________
INSTRUCTIONS
Attempt ALL Questions

1.
a)
The Central Bank has laid down regulations to govern the performance of the financial intermediaries. Discuss the importance of those regulations to the financial intermediaries. [10 marks]
b)
Explain the various types of regulations instituted by the Central Bank.[15 marks]

2.
a)
Discuss the factors that affect stock prices in the stock market. [8 marks]
b)
A company’s share is currently selling for sh 40. It is expected that a divided of sh 3 per share and a price of sh 42 will be obtained at the end of one year. Should the share be purchased if the required rate of return is 11%? [5 marks]
c)
Define a market crash and its likely causes. [ 12marks]

3
a)
Good corpoarate governance practices at the Nairobi Stock Exchange can enhance its performance. Discuss [15 marks]
b)
To what extent have the corporate governance practices been violated at he Nairobi Stock Exchange? [ 10 marks]

4.
Distinguish between:
a)
Backwardation and random walk. [ 4 marks]
b)
Pure expectations theory and market segmentation theory. [ 4 marks]
c)
Stop – loss order and stop- buy order. [ 4 marks]
d)
Investment grade bonds and junk bonds. [ 4 marks]
e)
Interest rate parity and purchasing power parity. [ 4 marks]

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