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Bbm 311: Financial Institutions And Markets Question Paper

Bbm 311: Financial Institutions And Markets

Course:Bachelor Of Business Management

Institution: Moi University question papers

Exam Year:2016

QUESTION ONE
In recent years,there has been a trend towards "cross-border" listing of securities of quoted companies. This has reduced the over-reliance by companies on domestic capital markets.
Required:
a) Explain the meaning of "cross-border" listing. (3marks)
b) Identify and explain six reasons why companies in Kenya may seek "cross-border"listing. (12marks)
c) Identify five barriers to "cross-border"listing. (5marks)
d) In relation to capital markets, differentiate between the term stock markets and financial markets. (5marks)

QUESTION TWO
a) Explain how the Capital market Authority can ensure:
i) Faster growth and development of the Nairobi Stock Exchange or Stock Exchange in your country. (6marks)
ii) Development of other stock exchanges in Kenya or in your country. (4marks)
b) i) What is a stock exchange index? (1mark)
ii) Outline four drawbacks of the Nairobi Stock Exchange index (4marks)

QUESTION THREE
a) i) What is financial intermediations? (2marks)
ii) Identify any five services that financial intermediaries provide (5marks)
b) What economic advantages are created by existence of:
i) Primary markets (2marks)
ii) Secondary market
(2marks)
iii) Investment Banks (4marks)

QUESTION FOUR
a) Briefly explain how the following financial institutions promote economical development stating their products;

i) Real estate investment trust(REITs). (3marks)
ii) Unit Trust(UTs) (3marks)
b) Market risk is one of the risk faced by financial institution. This particular risk cannot be completely removed by diversification, but it can be reduced by hedging.
i) In relation to the above statement define what is hedging. (1mark)
ii) Explain different types of derivative used by financial institutions to reduce risk through hedging (8marks)

QUESTION FIVE

a) Explain four implication of Efficient Market Hypothesis(EMH) for financial decision makers (8marks)
b) Explain how savings and credit co-operative societies mobilize savings and aid investments (7marks)

QUESTION SIX
a) Foreign Direct Investment(FDI) plays a crucial role in revamping less developed economies. Explain various obstacles to the flow of (FDI) into the Kenyan economy. (9marks)
b) Write notes on the following types of Arbitrage operations
i) Conditional Arbitrage (2marks)
ii) Location Arbitrage (2marks)
iii) Triangular Arbitrage (2marks)

Bbm 311: Financial Institutions And Markets Question Paper

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