UNIVERSITY OF SOMALIA (UNISO)

FACULTY OF BUSINESS ADMINISTRATION

ACADEMIC YEAR 2019-2020
FINAL TERM EXAMINATION

Classes: Instructions:
Semester: VII a. You Have 2:00Hrs to Complete This Test
Subject: Introduction to banking b. Write Your Name& Your ID Number on every Exam Paper You Use.
Lecturer: Abdunnasir Ahmed Ali c. Label Your Question Numbers Clearly and Correctly.
d. This Test Will Account for 40% of Semester Marks
Date:

____________ :Name: ________________________________________________________ ID No

Answer any five questions you should maintain sequence of all parts of each question
Question: 1
A) How do adverse selection and moral hazard affect the bank lending function? How can banks
minimize such problems?

A) Explain the concepts of delegated monitoring and consumption smoothing?

Question: 2
B) How do lenders’ and borrowers’ requirements differ? How can financial intermediaries bridge the
gap between them?
C) What are venture capitalists? To what extent are they similar to private equity finance?

Question: 3
A) Explain the relevance of information asymmetries in the intermediation process?

B) What are the benefits of universal banking Compared with specialist banking?

Question: 4
A) Why is there a trade-off between liquidity and profitability?
B) Describe are the main limitations of financial regulation?
Question: 5
Gross Loans $275 Trading Account Securities $2
Allowance for Loan Losses 5 Other Real Estate Owned 4
Investment Securities 36 Goodwill and other 3
Intangibles
Common Stock 5 Total Liabilities 375
Surplus 19 Preferred Stock 3
Total Equity Capital 39 Nondeposit Borrowings 20
Cash and Due from Banks 9 29
Miscellaneous Assets 38
A) If you know the following figures:

Question: 6
A) Explain the concept of liquidity management?

B) If you know the following figures

 UNIVERSITY OF SOMALIA (UNISO)
FACULTY OF BUSINESS ADMINISTRATION
ACADEMIC YEAR 2019-2020
FINAL TERM EXAMINATION

Total interest income $290 Provision for loan losses $10

Total interest expenses 205 Income taxes 15
Total noninterest income 27 Dividends to common stockholders 11
Total noninterest expenses 40