Financial Markets and Institutions 5 TTS SET

8/8/2019 Financial Markets and Institutions 5 TTS SET

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THE OPEN UNIVERSITY OF TANZANIA

UNIVERSITY EXAMINATIONS 2010

FINANCIAL MARKETS AND INSTITUTITONS OAF 323

This paper contains three questions

Attempt all questions

Closed Book Examination- Dar centre

Time 2 hours

Question 1

1.1 Define a financial system and identify its components

1.2 Briefly explain the types of financial markets

1.3 Why are financial markets important to firms and investors?

Question 2

2.1 Financial intermediaries acts like a hub in any economy. Explain

2.2 Why are secondary markets important? 2.3 What are (a) initial public offerings and (b) secondary offerings?

Question 3

3.1 What are financial instruments?

3.2 Money market securities, in general, provide lower returns than capital market securities. Inthe presence of the secondary market where capital securities are easily tradable, whywould anyone invest in money market securities instead of capital market securities?


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Time 2 hours

Question 1

1.1 define the term financial market

1.2 briefly explain the types of financial markets


Question 2

2.1 Contrast between money market and capital markets

2.2 Describe the following money market securities: (a) Treasury bills, (b) commercialpaper, and (c) negotiable certificates of deposit.

Question 3

3.1 What are financial instruments?

3.2 How does stock differ from bonds in terms of ownership privileges?

3.3 Explain why firms that issue a corporate bond must promise investors a higher return than

that available on a Treasury security that has the same maturity.



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Time 2 hours

Question 1

1.1 Define the term financial system

1.2 Describe derivative securities and explain why firms and investors use them.


Question 2

2.1 What is a bond?

2.2 You purchase a new 182-day Treasury bill with an annualized yield of 5%. When it maturesit will be worth $10,000. How much did you pay for the bond?

Question 3

3.1 Explain the nature and characteristics of the foreign exchange market

3.2 Distinguish between spot and forward markets

3.3 What is an investment banker, and what major functions does he or she perform?




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Time 2 hours

Question 1

1.1 Define the term financial system

1.2 Describe derivative securities and explain why firms and investors use them.

Question 2

2.1 Define each of the following terms: a) Money market; capital marketb) Primary market; secondary market; initial public offering (IPO) marketc) Private markets; public markets and. Spot market; futures market

2.2 Consider a 30-year, fixed-rate mortgage for Tsh 100,000 at a nominal rate of 9%. If the borrower wants to pay off the remaining balance on the mortgage after making the 12th payment, what is the remaining balance on the mortgage?

Question 3

3.1 What are the types of domestic financial markets?

3.2 With reference to mutual funds explain the following terms: asset mix, NAV discount, rateof return, Ex- mark, gross yield, portfolio turnover ratio, and expense ratio.

3.3 Identify and describe different types of stock market securities




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Financial Markets and Institutions 5 TTS SET

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