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    CBF 311 Odel

    Uploaded by

    Ray Rose
    This document contains an exam for the course CBF 311: Introduction to Banking and Financial Services given in December 2018 at the Catholic University of Eastern Africa. The exam has four questions, with students required to answer question one and any other two questions. Question one covers the advantages of organized financial markets and intermediaries, the differences between funded and unfunded pension schemes, why shares in closed-ended mutual funds often sell for less than assets, and how insurance companies deal with moral hazard and adverse selection. The other questions cover topics like how the financial system can impact aggregate demand, the meaning of a negative net acquisition of financial assets, the importance of share price in takeovers, and the functions of banks, building societies, and

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

    CBF 311 Odel

    Uploaded by

    Ray Rose
    20 views2 pages
    This document contains an exam for the course CBF 311: Introduction to Banking and Financial Services given in December 2018 at the Catholic University of Eastern Africa. The exam has four questions, with students required to answer question one and any other two questions. Question one covers the advantages of organized financial markets and intermediaries, the differences between funded and unfunded pension schemes, why shares in closed-ended mutual funds often sell for less than assets, and how insurance companies deal with moral hazard and adverse selection. The other questions cover topics like how the financial system can impact aggregate demand, the meaning of a negative net acquisition of financial assets, the importance of share price in takeovers, and the functions of banks, building societies, and

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    Banking and finance questions

    Original Title

    CBF 311 ODEL

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    This document contains an exam for the course CBF 311: Introduction to Banking and Financial Services given in December 2018 at the Catholic University of Eastern Africa. The exam has four questions, with students required to answer question one and any other two questions. Question one covers the advantages of organized financial markets and intermediaries, the differences between funded and unfunded pension schemes, why shares in closed-ended mutual funds often sell for less than assets, and how insurance companies deal with moral hazard and adverse selection. The other questions cover topics like how the financial system can impact aggregate demand, the meaning of a negative net acquisition of financial assets, the importance of share price in takeovers, and the functions of banks, building societies, and

    Copyright:

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

    CBF 311 Odel

    Uploaded by

    Ray Rose
    This document contains an exam for the course CBF 311: Introduction to Banking and Financial Services given in December 2018 at the Catholic University of Eastern Africa. The exam has four questions, with students required to answer question one and any other two questions. Question one covers the advantages of organized financial markets and intermediaries, the differences between funded and unfunded pension schemes, why shares in closed-ended mutual funds often sell for less than assets, and how insurance companies deal with moral hazard and adverse selection. The other questions cover topics like how the financial system can impact aggregate demand, the meaning of a negative net acquisition of financial assets, the importance of share price in takeovers, and the functions of banks, building societies, and

    Copyright:

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

    THE CATHOLIC UNIVERSITY OF EASTERN AFRICA

    P.O. Box 62157


    A. M. E. C. E. A 00200 Nairobi - KENYA
    Telephone: 891601-6
    Fax: 254-20-891084
    MAIN EXAMINATION E-mail:[email protected]

    AUGUST - DECEMBER 2018 TRIMESTER

    FACULTY OF COMMERCE

    DEPARTMENT OF ACCOUNTING AND FINANCE

    ODEL PROGRAMME

    CBF 311: INTRODUCTION TO BANKING AND FINANCIAL SERVICES

    Date: DECEMBER 2018 Duration: 2 Hours


    INSTRUCTIONS: Answer Question ONE and ANY OTHER TWO Questions

    Q1. a) Discuss the advantages to deficit and surplus units of using organised
    financial markets and financial intermediaries. (10 marks)

    b) Distinguish between funded and unfunded pension schemes. Would you


    worry if you were a member of the latter? (5 marks)

    c) Why do shares in closed-ended mutual funds often sell for less than the value
    of their underlying assets? (5 marks)

    d) Explain how insurance companies try to deal with the problems of moral
    hazard and adverse selection. (5 marks)

    e) Briefly summarise the key differences between DTIs and NDTIs. (5 marks)

    Q2. a) Outline three ways in which the behaviour of the financial system could affect
    the level of aggregate demand in the economy. (6 marks)

    b) If your income and capital account showed that you had made a ‘negative net
    acquisition of financial assets’, what would this mean in practice? (4 marks)

    c) Why does a company’s share price matter in a takeover battle? If you were
    the financial director of a predator firm, what would you want to happen to
    your firm’s share price? Might you be able to influence it in any way?
    (10 arks)

    Cuea/ACD/EXM/AUGUST - DECEMBER 2018/ACCOUNTING AND FINANCE Page 1

    ISO 9001:2008 Certified by the Kenya Bureau of Standards


    Q3. a) Discuss the advantages to deficit and surplus units of using organised
    financial markets and financial intermediaries. (10 marks)

    b) Discuss the functions of a financial system (5 marks)

    c) Explain briefly the difference between deposit-taking and non-deposit-taking


    intermediaries. Give two examples of each. (5 marks)

    d) Distinguish between deficit and surplus units. (4 marks)

    e) Distinguish between ‘saving’ and a ‘financial surplus’. (3 marks)

    f) Why do people simultaneously hold financial assets and liabilities? (3 marks)

    Q4. a) Compare and contrast (i) the functions and (ii) the balance sheets of banks
    and building societies. (10 marks)

    b) Why might conflicts arise between some functions of the central bank?
    (5 marks)

    c) Explain what is meant by ‘lender of last resort’ and show how this role
    enables the central bank to influence the level of short-term interest rates.
    (5 marks)

    *END*

    Cuea/ACD/EXM/AUGUST - DECEMBER 2018/ACCOUNTING AND FINANCE Page 2

    ISO 9001:2008 Certified by the Kenya Bureau of Standards

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