Hbc2213:Financial Institutions Question Paper
Hbc2213:Financial Institutions
Course:Bachelor Of Commerce
Institution: Meru University Of Science And Technology question papers
Exam Year:2014
QUESITON ONE – (30 MARKS)
(a) Discus the importance of financial markets in an economy. (6 Marks) (b) Besides banks what are the other important financial intermediaries, for each explain the key role within an economy. (8 Marks) (c) Distinguish between the following types of markets (i) Primary market vs secondary market (ii) Money market vs capital market (iii) Spot market vs forward market (6 Marks) (d) (i) Explain the primary reasons why governments regulates financial markets. (4 Marks) (ii) Explain four types of regulation that governments use in regulating financial markets. (6 Marks)
QUESTION TWO – (20 MARKS)
(a) Describe the following terms as used in financial markets (i) Financial innovation (ii) Securitization (iii) Financial intermediation (iv) Moral hazard (8 Marks) (b) Describe three financial innovation products that have revolutionalised Kenya’s financial markets. (12 Marks)
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QUESTION THREE – (20 MARKS)
(a) Explain the concept of efficient market hypothesis and explain the levels of efficiency that exist in a financed market. (8 Marks) (b) “An efficient market is one in which no one ever profits from having better information from the rest” Explain the validity of this statement. (7 Marks) (c) Discuss five principal benefits that attract investor to mutual funds. (5 Marks)
QUESTION FOUR – (20 MARKS)
(a) “The invention of the computer is the major factor behind the decline of the banking industry” Discuss this statement. (12 Marks) (b) What is a credit union and what are the primary advantages enjoyed by credit unions. (8 Marks)
QUESTION FIVE – (20 MARKS)
(a) What are the qualities of a good financial market? (6 Marks) (b) Identify three components of the financial market and for each describe at least two securities that are traded in the market and the main participants in those markets. (14 Marks)
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