MAASAI MARA UNIVERSITY

REGULAR UNIVERSITY EXAMINATIONS

2018/2019 ACADEMIC YEAR
THIRD YEAR FIRST SEMESTER
SCHOOL OF BUSINESS AND ECONOMICS
BACHELOR OF COMMERCE (FINANCE OPTION)

COURSE CODE: BCM 3115

COURSE TITLE: FINANCIAL MARKETS AND
INSTITUTIONS

DATE: 13TH DECEMBER, 2018 TIME: 0830 - 1030 HRS

INSTRUCTIONS TO CANDIDATES
1. Answer Question ONE and any other THREE questions
2. All Examination Rules Apply

This paper consists of 2 printed pages. Please turn over

QUESTION ONE:
a) Distinguish between the following markets: (6 marks)
i. Primary and secondary Financial markets.
ii. Call money markets and bills markets.
iii. Bulls and Bears as used in stock markets.
b) XYZ is a Private limited company in Kenya that intends to convert to a public
limited company and hence have it listed with the Nairobi Securities
Exchange Market. The owners have approached you for advice concerning
their intention. Explain the reasons why you may encourage or discourage
them on their intended move. (10 marks)
c) With examples from Kenya discuss the functions of Savings and Credit
Cooperatives (SACCOs) as financial intermediaries, highlighting why they
have become so popular in Kenya these days. (9 marks)
QUESTION TWO:
a) Commercial banks are big participants in the financial markets in any
economy. Explain eight roles they play in Kenya as financial intermediaries.
(8
marks)
b) Explain problems commercial banks encounter as financial intermediaries in
Kenya. (7 markets)
QUESTION THREE:
a) The Capital Markets Authority (CMA) was established to assist in the creation
of a conducive environment for growth and development of capital markets
in Kenya. Discuss specific roles that it was tasked with and highlight whether
it has achieved the goals for its establishment. (8 marks)

b) Discuss roles the Nairobi Securities Exchange Market is playing in the Kenyan
economy. (7 marks)

QUESTION FOUR:
a) The following are financial agencies in Kenya’ s capital markets:
i. Underwriters.
ii. Brokers.
Explain how each participates in financial intermediation and roles each plays in
Kenya. (8 marks)
b) State with reasons why you think Kenyan Money markets are developed or
not developed. (7 marks)
QUESTION FIVE:
a) In the recent past the arena of financial markets has been marked by entry of
many players like Branch International, Tala, Mshwari operated by Safaricom
among others. Discuss, with reasons whether their entry is important in
financial intermediation. (4 marks)
b) Discuss functions performed by insurance firms in the context of financial
intermediation in Kenya, highlighting whether their existence is important in
view of financial intermediation. (5 marks)
c) Savings and credit cooperatives (SACCOs) in Kenya have become so popular
lately. Discuss reasons attributed to the popularity. (6 marks)
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