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Hbc2213:Financial Institutions Question Paper

Hbc2213:Financial Institutions

Course:Bachelor Of Commerce

Institution: Meru University Of Science And Technology question papers

Exam Year:2010

QUESTION ONE (30 MARKS)
a) Explain the meaning of surplus unit and deficit unit giving examples in each case. ( 5 Marks) b) Explain the role of the financial systems in an economy. ( 5 Marks) c) Explain how inflation affects interest rate. ( 5 Marks) d) What type of fund would want to buy if you believed that stock market were always fully and completely efficient. Explain why? ( 5 Marks) e) How do the regulation of depository institutions contribute to rapid growth of money market mutual funds. ( 5 Marks) f) Explain the basic function of commercial banks. ( 5 Marks)
QUESTION TWO (20 MARKS) a) Explain factors that determine real rate of interest. ( 8 Marks) b) Explain how forecasters us the flow of fund approach to determine future interest rate movement. ( 8 Marks) c) Explain the objectives of monetary policy. ( 4 Marks) QUESTION THREE (20 MARKS) a) What is moral hazard and how does insurance contribute to it on the part of both depositors and bank management. ( 10 Marks) b) Bank regulation is considered to be in the public interest. Thus the more the regulations the better. Explain this statement. ( 10 Marks)
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QUESTION FOUR (20 MARKS) a) Explain the role which International Monetary Fund plays in the financial administration of the developing countries giving particular attention to Kenya. ( 10 Marks) b) Explain the role of Credit Reference Bureau (CRB) in the banking industry. ( 3 Marks) c) Explain the following stock exchange terms: (7 Marks) i) Right issue ii) Bonus issue iii) EX Div iv) Quotation v) Contract role vi) Option vii) Watered capital

Hbc2213:Financial Institutions Question Paper

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