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Bac 305:Financial Markets And Institutions Question Paper
Bac 305:Financial Markets And Institutions
Course:Bachelor Of Commerce
Institution: Bondo University College question papers
Exam Year:2008
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATION OF 2007/2008
SECOND SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
BAC 305:FINANCIAL MARKETS AND INSTITUTIONS
DATE:19TH JUNE,2008
INSTRUCTIONS:Attempt question ONE and any THREE others.
QUESTION ONE:
(a)Assume you are addressing a layman.Recount,with brevity the particulars of what can now be referred to as the Francis Thuo and partners saga.Has it had any recurrences?In your briefing cover amongst others;what kind of entity is it?What do such entities do?What did it do?Why?What developments made what they did so much more possible?What was the end result? (15marks)
(b)What would you suggest ought to be done in light of the developments and why?
QUESTION TWO:
Define the following
(i)market
(ii)Turnover(as used in daily stocks business news and reports)
(iii)Market capitalization(as used in daily stocks business news and reports)
(iv)Index movement(as used in daily stocks business news and reports)
(v)Tombstone
(Vi)Clearing house(in banking)
(Vii)Real estate
(Viii)Prospectus.
Write short notes on the following.
(ix)Investment in stocks is risky yet people keep investing.List three reasons why?
(x)Name two products that some of the big banks have come up with targeting groups like the MFIs
(xi)In the MFI Act,what provisions exist in the capitalization of MFIs
(xii)What forms the biggest portion of banks liabilities?
(xiii)If a bank fully paid up share capital of Ksh.400,000,000.What is the highest in deposits it can take from the public as per the Banking Act provisions.
(xiv)For what reason would a bank welcome disintermediation
(xv)What do you understand by a "mortgage protection policy"(Total:15marks)
QUESTION THREE:
(i)In general terms,since each premium is so small compared to contingent claim,how does an insurance company make money?(4marks)
(ii)Name and briefly describe the mandate of four finance institutions in Kenya?(4marks)
(iii)Write short notes on the concept and outreach of SACCOs in Kenya(4marks)
(iv)Pensions and provident funds are both similar but unique from each other.Explain(3marks)
QUESTION FOUR:
What are techniques are used to control money supply in an economy?Critically assess the effectiveness of each?(11marks)
(I)Khamundu has approval from the CBK to buy a 91 days discount bond of Ksh.600,000 face value at Kshs.592,000.He does not plan to reinvest.Ignoring any commissions payable,what per annum rate of interest will he earn?(2marks)
(II)If an insurance cover has a 2.5 percent deductible and a car that is written off has an approved claim of Kshs.125,000.What does the insured walk away with?(2marks)
QUESTION FIVE:
What key events have influenced the development of banking regulation in Kenya?In your answer,cite the banking provisions regarding:
(i)concept of "Fit and proper" and who determines the same
(ii)Lending to directors
(iii)The deposit protection fund
(iv)The use of the word bank. (Total:10marks)
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