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Fnce 414:Management Of Financial Institutions December 2009 Question Paper

Fnce 414:Management Of Financial Institutions December 2009

Course:Bachelor Of Commerce

Institution: Kabarak University question papers

Exam Year:2009

KABARAK UNIVERSITY
UNIVERSITY EXAMINATIONS
2009/2010 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF COMMERCE
COURSE CODE: FNCE 414
INSTRUCTIONS:
1. Answer questions ONE and any other TWO questions
2. Write your registration number clearly, be neat, brief and to the point
Question 1
i. In simple terms management can be defined as “the Art of establishing an environment in which human capital
can freely perform as individuals and yet co-operate towards an achievement of group objectives”.
With the above briefed background in mind discuss 5 managerial roles and describe 3 skills of the same. 10 marks
ii. Accounting and economic models are used in basic principles of modern corporate finance management as tools
to assists when making investment decisions. Discuss the two models in respect to market value. 8 marks
iii. Discuss the role of regulation in shaping the confidence and convenience functions in the management of
financial institutions. 4 marks
iv. Financial Institution Supervision Department Annual Report 2004, gave the management guidelines of the
Kenyan Financial Sector. In respect to this describe the sector and list 4 of its common guidelines. 8 marks

Question 2
i. The Kenyan government continues to develop the national Anti-money laundering at the same time combating
the financing of criminal activities such as the funding of terrorism.
Discuss any 5 provisions that are included in the Bill to this effect. 10 marks
ii. In the process of classification and clarification, the Kenyan 2006 Microfinance Bill gives definitions.
Describe any 5 of the definitions. 10 marks
Question 3
i. Apart from retained earnings, there are other methods that managers of financial institutions can apply in capital
formation strategies. Describe any 5 of these extra methods. 10 marks
ii. Discuss the internal versus external resources of financial liquidity of financial institutions. 10 marks

Question 4
i. At the moment many financial institutions have turned to Off- Balance Sheet Activities in managing their
profitability and capital adequacy, as an expert you have been approached for advice. Give them a critical view on
how to mutually use O.B.S.As for the benefit of the shareholder. 16 marks
ii. Capital Generation Matrix is a useful instrument for capital planning, suppose that a financial institution
expects the following results:
1 Growth opportunities of 12 percent
2 Return On Equity of 15 percent
3 Retention Ratio of 60 percent
Use the above data to estimate the growth rate (g) and expound on the other elements of the above data. 4 marks

Question 5
i. As a prerequisite for adoption of the Risk Based supervisory framework, financial institutions supervisory
department has developed Risk Management Guidelines for the financial sector. Describe any 5 of the guidelines
that cover the most common risks in financial institutions. 10 marks
ii. Discuss the challenges faced by the managers in the financial service industry. 10 marks

Fnce 414:Management Of Financial Institutions December 2009 Question Paper

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