ACCOUNTING AND FINANCE SET ONE

MARKING GUIDE

SECTION A: 25 MARKS

ANSWERS TO SUBSECTION 1: FINANCIAL MARKET

1. C 2. C 3. B 4. B 5.C 6. A 7.A 8.C 9.C 10. B

ASWERS TO SUBSECTION 2: DECNTRALISED FINANCIAL SYSTEM

1=C,2=D,3=C,4=A,5=A,6=D,7=D,8=A,9=C,10=A

ANSWERS TO SUBSECTION 3: ISLAMIC FINANCE

1. C 2.D 3.B 4.A 5. A

SECTION C: STRATEGIC MARKETING MANAGEMENT IN BANKING

MARKING GUIDE 25 MARKS

MARKING GUIDE
1. Explain in relation to:
- Characteristics of products: Products and services of banks are invisible, the
production and consumption occur simultaneously, Products and services of
banks are also made in different spaces, forming the heterogeneity of time,
and implementation of conditional executions, products of banks are
increasingly diversified, range of new products and services are launched
drastically.
- Characteristics of clients
: Client component is extremely important in the existence and development
of banks.
- Characteristics of competition: Competition in banking sector becomes
drastic when the number of market participants increases and banking
product portfolio expand continously.
2. Explain the 7Ps product, pricing,place, promotion,people,physical
evidence,process

3. Internal environment is a component of the business environment, which is

composed of various elements present inside the organization, that can affect or
can be affected with, the choices, activities and decisions of the organization.
It encompasses the climate, culture, machines/equipment, work and work
processes, members, management and management practices.
In other words, the internal environment refers to the culture, members, events and
factors within an organization that has the ability to influence the decisions of the
organization, especially the behaviour of its human resource. Here, members refer
to all those people which are directly or indirectly related to the organization such
as owner, shareholders, managing director, board of directors, employees, and so
forth.
The factors which are under the control of the organization, but can influence
business strategy and other decisions are termed as internal factors. It includes:

4. PESTEL analysis is a useful strategic tool which analyzes political,

economic, social, technological, environmental, legal factors of the macro
environment that companies have to take into consideration

5. Bank marketing functions Bank marketing has four major functions which
contribute significantly in banking development. That is distribution,support,
consumption and demand fuction

SECTION D: BANKING ENVIRONMENT MARKING GUIDE 25 MARKS

MARKING GUIDE

1. Internal environment is a component of the business environment, which is

composed of various elements present inside the organization, that can affect or
can be affected with, the choices, activities and decisions of the organization. It
encompasses the climate, culture, machines/equipment, work and work processes,
members, management and management practices. In other words, the internal
environment refers to the culture, members, events and factors within an
organization that has the ability to influence the decisions of the organization,
especially the behaviour of its human resource. Here, members refer to all those
people which are directly or indirectly related to the organization such as owner,
shareholders, managing director, board of directors, employees, and so forth.
The factors which are under the control of the organization, but can influence
business strategy and other decisions are termed as internal factors. It includes:

2. PESTEL analysis is a useful strategic tool which analyzes political,

economic, social, technological, environmental, legal factors of the macro
environment that companies have to take into consideration

SECTION E : LOAN PORTFOLIO MANAGEMENT MARKING GUIDE 20

MARKS

MARKING GUIDE
1.
i. Assessing LPM involves evaluating the steps bank management takes to
identify and control risk throughout the credit process.

ii. The loan policy is the primary means by which senior management and
the board guide lending activities.

2. Loan Portfolio Objectives

Loan portfolio objectives establish specific, measurable goals for the
portfolio. They are an outgrowth of the credit culture and risk profile. The
board of directors must ensure that loans are made with the following three
basic objectives in mind:
• To grant loans on a sound and collectible basis.
• To invest the bank’s funds profitably for the benefit of shareholders and
the protection of depositors.
• To serve the legitimate credit needs of their communities.

3. *Liquidity risk
*Credit risk
*CURENCY RISK
*Reputation risk
*FOREIGN EXCHANGE RISK
interest rate, price,
transaction, compliance, strategic, and reputation.

4. Loan Portfolio Management Supervision

Examiners draw conclusions about the quality of a bank’s loan portfolio
management from their on-site reviews and from continual supervision of the
bank’s lending departments. The purpose and scope of those reviews are discussed
briefly in the sections that follow. During their reviews, examiners should focus on
identifying a product’s or process’s sources and levels of risk rather than on
gathering data. Examiners should identify prospective risks as well as existing ones
because prospective risks must be evaluated if long-term
safety and soundness is to be ensured.

5. Objective: To determine the quantity of risk in the loan portfolio, help determine
the direction the risk is moving, and aid in the assessment of the aggregate risk
within the institution.

Note: “Loan Policy,” “Underwriting Guidelines,” and “Strategic Factors” are risk
management processes through which examiners reach conclusions about the
quality of risk management. However, they also exert a strong influence on the
quantity of risk and should be considered when drawing a conclusion about the
quantity of risk.

Conclusion: The quantity of risk is (low, moderate, high).

Conclusion: The quality of risk management is (weak,acceptable, or strong).