Вопрос
QUESTION THREE a) Explain any five distinctive features of Munctary market as opposed to Capital market (10marks) b) Describe the structure of the Kenyan Banking System (10marks) c) Explain the merits and demerits of operating a CDS Account with a reference to commercial banks (Smarks) QUESTION TWO a) Explain the main functions of Central Bank to a country's economy b) Describe the role Saccos Regulatory Authority (SASRA) play in the Kerryian. Context (Tmarks) a) Elucidate any five functions of monetary policy committee (smarks) b) Explain how fiscal policies inform budget preparation in Kenya (Tmarks) (Smarks)
Решения
4.2
(234 Голоса)
Фаина
профессионал · Репетитор 6 лет
Ответ
QUESTION THREEa) Five distinctive features of the Money Market as opposed to the Capital Market are:1. Short-term maturity: The money market deals with short-term financial instruments, typically with maturities of less than one year, while the capital market deals with long-term financial instruments, typically with maturities of more than one year.2. High liquidity: Money market instruments are highly liquid, meaning they can be easily bought and sold in the market, while capital market instruments may have lower liquidity.3. Lower risk: Money market instruments are generally considered to be lower risk compared to capital market instruments, as they are often backed by government or high-quality corporate entities.4. Lower returns: Due to the lower risk associated with money market instruments, the returns on these instruments are typically lower compared to capital market instruments.5. Narrower range of participants: The money market is primarily composed of institutional investors, such as banks, money market funds, and other financial institutions, while the capital market is open to a wider range of participants, including individual investors.b) The structure of the Kenyan Banking System consists of:1. Central Bank of Kenya (CBK): The CBK is the central bank of Kenya and is responsible for regulating and supervising the banking sector.2. Commercial Banks: These are the most common type of banks in Kenya and provide a wide range of banking services to individuals and businesses.3. Microfinance Banks: These banks focus on providing financial services to underserved segments of the population, such as small businesses and low-income individuals.4. Building Societies: These are financial institutions that primarily deal with savings and mortgage loans.5. Credit Unions: These are member-owned financial cooperatives that provide banking services to their members.c) The merits and demerits of operating a CDS (Certificate of Deposit) Account with a reference to commercial banks are:Merits:- Higher interest rates: CDS accounts typically offer higher interest rates compared to regular savings accounts.- Safety: CDS accounts are considered to be safe investments as they are insured by the FDIC (Federal Deposit Insurance Corporation) up to a certain amount.- Predictability: The fixed term and fixed interest rate of CDS accounts provide predictability in terms of returns.Demerits:- Lack of liquidity: CDS accounts have a fixed term and early withdrawal penalties, which can limit the liquidity of the account.- Inflation risk: The fixed interest rate of CDS accounts may not keep up with inflation, leading to a decline in the real value of the investment over time.- Limited access: CDS accounts are typically offered by commercial banks and may not be available to all customers.QUESTION TWOa) The main functions of the Central Bank to a country's economy are:1. Monetary policy implementation: The central bank is responsible for implementing the country's monetary policy, which involves managing interest rates and money supply to achieve economic goals such as price stability and economic growth.2. Currency management: The central bank is responsible for issuing and managing the country's currency, ensuring its stability and integrity.3. Financial stability: The central bank monitors and regulates the financial sector to ensure its stability and prevent financial crises.4. Foreign exchange management: The central bank manages the country's foreign exchange reserves and intervenes in the foreign exchange market to maintain the value of the national currency.5. Banking supervision: The central bank supervises and regulates commercial banks to ensure their soundness and stability.b) The role of the Saccos Regulatory Authority (SASRA) in Kenya is to:1. Regulate and supervise saccos: SASRA is responsible for regulating and supervising savings and credit cooperatives (saccos) in Kenya to ensure their soundness and stability.2. Protect consumers: SASRA ensures that saccos adhere to consumer protection regulations and provide fair and transparent services to their members.3. Promote financial inclusion: SASRA encourages the growth and development of saccos as a means of promoting financial inclusion and providing financial services to underserved segments of the population.4. Facilitate dispute resolution: SASRA provides a mechanism for resolving disputes between saccos and their members.5. Promote the stability of the financial sector: SASRA works to ensure the stability and soundness of the saccos sector, which contributes to the overall stability of the financial sector in Kenya.a) Five functions of the Monetary Policy Committee are:1. Setting monetary policy: The committee is responsible for setting the country's monetary policy, including interest rates and money supply targets.2. Assessing economic conditions: The committee monitors and assesses the economic conditions of the country, including inflation, growth, and employment.3. Forecasting economic conditions: The committee develops forecasts of future economic conditions to inform its policy decisions.4. Communicating policy decisions: The committee communicates its policy decisions to the public and the financial markets to ensure transparency and predictability.5. Reviewing financial stability: The committee monitors and assesses the stability