Professional Documents
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INSTRUCTIONS TO CANDIDATES
2 Answer only five (5) questions in the Answer Booklet Start each answer on a new page
3 Do not bring any material into the examination room unless permission is given by the
invigilator
QUESTION 1
b) Discuss the functions of any two (2) Non-bank Financial Institutions as financial
intermediaries in a financial system.
(8 marks)
QUESTION 2
b) What is a base lending rate (BLR)? Under the current interest rate framework who
sets the BLR and why?
(5 marks)
c) A surplus unit in a financial system would prefer a lower or higher interest rate?
Explain.
(5 marks)
QUESTION 3
a) If a company has excess funds, they can go to commercial banks to place these
funds to maximize returns. Discuss any three (3) products that banks can offer to the
surplus units.
(12 marks)
QUESTION 4
a) According to the Banking and Financial Institutions Act 1989, a 'bank' means a
person which carries on banking business. What does a 'banking business' means?
(10 marks)
b) List and explain any two (2) sources of funds and any two (2) uses of funds of
commercial banks.
(10 marks)
QUESTION 5
b) In your opinion, should the issuance of credit card by banks be controlled? Discuss
in terms of how it can affect the banks performance and the financial condition of an
individual.
(12 marks)
QUESTION 6
a) The following are selected data from financial statements of a commercial bank:
RM
Loans, advances and financing 25,500,000
Total assets 36,500,000
Interest income 2,500,000
Interest expense 950,000
Deposits from customers 22,750,000
Shareholder's fund 3,750,000
Net profit for the year 1,050,000
Calculate as many ratios from the above data to measure the bank's performance
and classify the ratios into the categories of profitability and liquidity.
(8 marks)
b) Asset quality is one of the important aspects that need to be looked into in
evaluating bank performance. Discuss how an asset quality is related to non-
performing loan (NPL).
(12 marks)
QUESTION 7
(5 marks)
c) Is a bank well protected when a loan is given out on an unsecured basis? Explain.
(5 marks)