April 2025 Financial Markets and Specialised Institutions Past Paper Answers

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QUESTION ONE
(a) Summarise THREE features of derivative markets. (3 marks)
(b) Analyse FOUR distinctions between “preference shares” and “ordinary shares”. (8 marks)
(c) XYZ Limited is contemplating immobilising its securities.
State FIVE demerits of this move. (5 marks)
(d) Under Section 12 of the Societies Act (Cap 108) of Kenya, the Registrar of Societies has the power to cancel the registration of a club under specific circumstances.

Outline FOUR such circumstances. (4 marks)
(Total: 20 marks)

QUESTION TWO
(a) Outline FIVE roles of the securities exchange in your country. (5 marks)
(b) Bidii Limited Company has been cleared for a rights issue for its shares. Analyse FIVE benefits that might accrue to the company from the issue. (5 marks)
(c) Malimingi Company has been accused of insider trading by providing material information to potential investors.
Explain to the directors of Malimingi Company FIVE types of such information. (10 marks)
(Total: 20 marks)

QUESTION THREE
(a) List SIX objectives of Capital Markets Authority or its equivalent in your country. (6 marks)
(b) In the event of any misconduct by the stockbroking agent, the stockbroker who appointed the stockbroking agent shall report the misconduct to the Authority within forty-eight hours of the occurrence of the misconduct.
Explain FOUR ways that demonstrate the right conduct of stockbrokers. (4 marks)
(c) Analyse FIVE participants in a financial market in your country, citing their various roles. (10 marks)
(Total: 20 marks)

QUESTION FOUR
(a) Describe THREE characteristics of an offer by tender. (6 marks)
(b) Examine FOUR types of crowdfunding used in raising capital for small business ventures. (8 marks)
(c) Central Depository Guarantee Fund is established within a central depository system of a country.
Explain THREE of its roles. (6 marks)
(Total: 20 marks)

QUESTION FIVE
(a) Jasho Limited has embraced self-listing to increase its market offerings.
Highlight SIX challenges associated with the listing. (6 marks)
(b) Explain THREE principles of the International Organization of Securities Commissions (IOSCO) for issuers. (6 marks)
(c) Evaluate FOUR indicators of liquidity crisis in a financial market. (8 marks)
(Total: 20 marks)
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