Dfi 302: Management Of Financial Institutions Question Paper

Dfi 302: Management Of Financial Institutions

Course:Bachelor Of Commerce

Institution: University Of Nairobi question papers

Exam Year:2013

INSTRUCTIONS:
Attempt ALL Questions.

QUESTION ONE
(a) Explain the term ''changing times for financial institutions''. (4 marks)

(b) What are the MAIN assumptions of the Loanable Funds Theory? Explain giving examples. (5 marks)

(c) Distinguish financial assets from real assets. (3 marks)

(d) Explain the Unbiased Expectation Theory clearly stating its MAIN assumptions. (13 marks)

QUESTION TWO
(a) Explain the equation for estimating the interest rate risk. (5 marks)

(b) A bond has a par value of US$ 100,000 a coupon rate of 14.5 % and a maturity period of 5 years. Calculate the duration of this bond. (11 marks)

(c) Explain the limitations of the Duration Equation. (5 marks)

(d) Explain how investors can benefit by using the Duration Equation. (4 marks)

QUESTION THREE
(a) Explain the main regulations of insurance companies. (5 marks)

(b) Using appropriate examples, explain the main performance measures of depository institutions, clearly stating the main limitations of using each performance measure. (20 marks)

QUESTION FOUR
Explain the following:

(a) Mutual Funds. (5 marks)

(b) Real Estate Investment Trusts. (4 marks)

(c) Defined Contribution Plan. (3 marks)

(d) Fee-Based Incomes of Depository Institutions. (5 marks)

(e) Risk measures of Insurance Companies. (8 marks)

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