WEDNESDAY: 26 April 2023. Afternoon Paper. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.


1.  Explain THREE challenges associated with cross-border listing. (6 marks)

2. Highlight SIX risks faced by depository institutions in your country. (6 marks)

3. Financial markets play a prominent role in many economies. Governments around the world have therefore deemed it necessary to regulate certain aspects of these markets.
With reference to the above statement, explain FOUR forms of government regulations on financial markets and other specialised institutions in your country. (8 marks)

(Total: 20 marks)



1. Distinguish between “financial engineering’’ and “financial innovations” as used in financial markets and institutions. (4 marks)

2. Outline FOUR functions of financial intermediaries in an emerging economy. (4 marks)

3. Explain THREE ways of promoting public confidence in a financial system. (6 marks)

4. Summarise SIX functions of insurance brokers in your country. (6 marks)

(Total: 20 marks)



1. Describe the remedies that Central Depository and Settlement Corporation (CDSC) or its equivalent can take in the event of a breach of duty by a participant in the securities market. (6 marks)

2. Explain THREE types of derivative contracts. (6 marks)

3. Explain FOUR reasons why investors prefer the futures market as opposed to cash market trading vehicles. (8 marks)

(Total: 20 marks)



1.  The Retirement Benefits Authority (RBA) requires Pension Scheme Trustees to attend the Trustee Development Programme.

Explain the benefit of this requirement. (2 marks)

Outline FOUR obligations of Trustees as covered in the RBA Act. (4 marks)

2. Preference shares are often used by companies to raise capital without diluting the ownership or control of existing shareholders.

With reference to the above statement, analyse THREE features of these shares. (6 marks)

3. Evaluate FOUR drawbacks of credit rating agencies or equivalent bodies in your country. (8 marks)

(Total: 20 marks)



1. Simana Investments Ltd. is a Public Company and is considering increasing its shares listed in the securities exchange. Cyrus Kamau, a shareholder has received information that the Company is considering issuing either a bonus issue or a rights issue.

Explain to him TWO advantages and TWO disadvantages of bonus and rights issue. (4 marks)

2. Describe FOUR functions of Central Depository Guarantee Fund (CDGF) or its equivalent in your country. (4 marks)

3. Identify FOUR ways a firm could use to raise capital in the securities market. (4 marks)

4. Summarise FOUR characteristics of a well-functioning financial system. (4 marks)

5. Post-listing requirements are the obligations that a company must meet after it has successfully listed its shares on a securities exchange.

Identify FOUR of these requirements. (4 marks)

(Total: 20 marks)

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