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    Bac 310 Management of Financial Institutions

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    Steve Jones
    This document is an exam for a Bachelor of Commerce degree in the management of financial institutions. It contains 5 questions testing students' knowledge of topics like pension vs provident funds, regulations of insurance companies, investment advisory companies, and how financial institutions use securitization to manage risks. It provides instructions to answer 1 question and any other 2 questions.

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    Bac 310 Management of Financial Institutions

    Uploaded by

    Steve Jones
    17 views2 pages
    This document is an exam for a Bachelor of Commerce degree in the management of financial institutions. It contains 5 questions testing students' knowledge of topics like pension vs provident funds, regulations of insurance companies, investment advisory companies, and how financial institutions use securitization to manage risks. It provides instructions to answer 1 question and any other 2 questions.

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    BAC 310 MANAGEMENT OF FINANCIAL INSTITUTIONS

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    This document is an exam for a Bachelor of Commerce degree in the management of financial institutions. It contains 5 questions testing students' knowledge of topics like pension vs provident funds, regulations of insurance companies, investment advisory companies, and how financial institutions use securitization to manage risks. It provides instructions to answer 1 question and any other 2 questions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    17 views2 pages

    Bac 310 Management of Financial Institutions

    Uploaded by

    Steve Jones
    This document is an exam for a Bachelor of Commerce degree in the management of financial institutions. It contains 5 questions testing students' knowledge of topics like pension vs provident funds, regulations of insurance companies, investment advisory companies, and how financial institutions use securitization to manage risks. It provides instructions to answer 1 question and any other 2 questions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    MACHAKOS UNIVERSITY COLLEGE

    (A Constituent College of Kenyatta University)


    University Examinations for 2015/2016 Academic Year

    SCHOOL OF BUSINESS AND ECONOMICS

    DEPARTMENT OF BUSINESS ENTREPRENEURSHIP AND MANAGEMENT


    SCIENCES

    SECOND SEMESTER EXAMINATION FOR DEGREE IN BACHELOR OF


    COMMERCE

    BAC 310: MANAGEMENT OF FINANCIAL INSTITUTIONS

    Date: 27/4/2016 Time: 8:30 – 10:30 AM


    INSTRUCTIONS

    Answer Question One and Any Other Two Questions

    1. a) compare and contrast pension benefits from provident fund benefits. (6 marks)

    b) Until recently, the common belief was that financial institutions existed to solve
    other institutions financial management problems. With examples, explain the
    main issues that managers of today’s financial institutions need to address to
    ensure solvency and profitability of those institutions. (6 marks)

    c) Explain the main regulations of insurance companies. (5 marks)

    d) Explain the three main investment advisory companies (2 marks)

    e) How can a financial institution be subject to sovereign risk even if it lends to the
    highest quality foreign corporations. (3 marks)

    f) How do financial institutions use securitization to manage their interest rate


    ,credit and liquidity risk. (4 marks)

    2. a) By law the activities of most financial institutions were limited so that for several
    decades their financial management was not a terribly complex process.
    regulators set prices and costs such that financial institutions were usually
    profitable and relatively few failed. Explain the challenges that face the present
    day financial institutions especially those operating in a financially liberalized
    environment. (10 marks)

    Examination Irregularity is punishable by expulsion Page 1 of 2


    b) State and briefly explain six aspects of internal controls that deserve special
    attention in management of financial institutions (6 marks)

    c) Identify any incidences in the recent past that the central bank of Kenya has
    applied moral suasion in the context of monetary regulation. (4 marks)

    3. a) Explain the main objectives of regulating financial institutions in Kenya.


    (6 marks)
    b) Explain the following benefits of financial intermediation. (2 mks each)

    i) transmission of monetary policy


    ii) reduced transaction cost
    iii) maturity intermediation

    c) In what ways does credit analysis of a mid market borrower differ from that of a
    small business borrower. (4 marks)

    d) How does securitization help a financial institution manage its interest rate risk
    and liquidity risk exposure. (4 marks)

    4. a) when a steel company goes bankrupt ,other companies in the same industry
    benefit because they have one less competitor. but when a bank goes bankrupt
    other banks do not necessarily benefit. Explain this statement. (6 marks)

    b) If a financial institution funds longterm assets with short term liabilities, what will
    be the impact of an interest rate increase on earnings? (5 marks)

    c) how does the regulation of insurance companies compare with that of


    commercial banks. (3 marks)

    d) Explain the main functions of the front office part of an investment bank.

    (6 marks)

    5. a) state and explain five functions of insurance regulatory authority [IRA] (5 marks)

    b) the retirement benefits authority[RBA] has indicated a shift to a risk based


    approach to supervision under which it will direct resources and regulatory focus
    to the areas that pose the greatest risk to achieving statutory objectives. Discuss
    this statement. (5 marks)

    c) Discuss how economic transactions between household savers of funds and


    corporate users of funds would occur in a world without financial intermediaries.
    (10 marks)

    Examination Irregularity is punishable by expulsion Page 2 of 2

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