Series: APR 2023

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TMFS – APRIL 2023 – L2 – Q8 – PSBR and Money Supply Financing

Discuss how the source of financing PSBR may be less relevant than the medium of borrowing for its effect on money supply.

With reference to PSBR (Public Sector Borrowing Requirement) and its effect on money supply, the source of financing it may not be more relevant than the medium of borrowing that underlies it. Discuss.

[20 Marks]

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TMFS – APRIL 2023 – L2 – Q6 – Nominal Interest Rates, Macroeconomic Objectives

Short notes on factors influencing nominal interest rates and conventional macroeconomic policy objectives.

Write short notes on the following:

a) Factors that influence changes in nominal rates of interest. [10 Marks]

b) The conventional objectives of macroeconomic policy. [10 Marks

[ Total Marks: 20]

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TMFS – APRIL 2023 – L2 – Q5 – Interest Rate Swaps, Leasing, Policy Targets, Redemption Yield

Explain use of interest rate swaps for exchange rate risk, reasons for leasing popularity, define intermediate policy targets, and define redemption yield.

a) Explain how a company may use interest rate swap as a means of managing exchange rate risk. [9 Marks]

b) List four reasons why leasing serves as a popular source of finance for the corporate sector. [4 Marks]

c) List and define each of the intermediate target variables of economic policy. [5 Marks] d) What is redemption yield? [2 Marks] [Total Marks: 20]

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TMFS – APRIL 2023 – L2 – Q4 – Capital Adequacy in Banks

Define capital adequacy and explain its management under BoG rules, including for banks with subsidiaries.

a) What is capital adequacy? [3 Marks]

b) Under Bank of Ghana rules how is capital adequacy managed by a bank, including a bank that has a subsidiary. [17 Marks]

[Total: 20 Marks]

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TMFS – APRIL 2023 – L2 – Q3 – Benefits of Financial Intermediation

Explain how financial intermediation benefits lenders, borrowers, and society.

Explain how financial intermediation benefits the lender, the borrower and the society.

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TMFS – APRIL 2023 – L2 – Q2 – Financial Risks in Ghanaian Economy

Explain major financial risks faced by the personal sector in Ghana following the bond market issues from the Government's DDEP.

The general Ghanaaian public has expressed concern about investing in the economy following the recent turmoil in the bond market, as a result of Government’s Domestic Debt Exchange Programme. Explain the major financial risks that the personal sector may experience in the Ghanaian economy.

[20 Marks]

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TMFS – APRIL 2023 – L2 – Q1 – Methods of Corporate Equity Finance

Identify and explain four methods of corporate equity finance suitable for a company avoiding bank loans or credit.

Assume you are the economic and financial consultant of the newly established Abrewa Ventures Ltd which was formed with the owners’ own resources. At its 3d General Meeting, the shareholders approved plans for the medium-term growth of the company but concerns were raised about how to finance it. Upon advice, the owners decided not to use bank loans or any form of credit for the anticipated growth. Identify and explain the four methods of corporate equity finance that would be appropriate to meet the funding needs of the company.

[20 Marks]

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SMM – APR 2023 – L4 – Q6 – RATER Model and Service Quality Perceptions

Report on how the RATER Model influences customers' perceptions of service quality in a bank with poor survey results.

A recent survey of customers of your bank has revealed a poor service quality and the Chief Executive Officer (CEO) is worried about the findings of the survey. As Head of Customer Service, he has asked you to write a detailed report on how the RATER Model affects customers’ perceptions of service quality. (20 marks)

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SMM – APR 2023 – L4 – Q5 – Ethics in Marketing and Henderson’s Model

Define ethics in marketing, distinguish legal from ethical behavior, and discuss four implications using E. Henderson's Model.

Your Managing Director learned from a recent seminar on business ethics he attended that marketing managers must essentially behave legally and ethically at all times. He has therefore asked you, in your role as the Head of Marketing to submit a paper on what ethics is, as applied to marketing. You should explain in your paper the distinction between legal and ethical behaviour before addressing any four implications of ethics to marketing. Be guided by the E. Henderson’s Model.

(20 marks)

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RM – APR 2023 – L4 – Q2 – Risk Treatment Methods and Adoption Factors

Discuss five risk treatment methods and five factors for adopting a particular method in managing residual risks.

(a) Risk can never be completely eliminated in business but there are mechanisms available to mitigate or transfer identified risk in organisations.

Discuss at least 5 (five) of such risk treatment methods. (10 marks)

(b) Discuss in detail five (5) factors which bank management must consider in adopting a particular risk transfer/treatment method in the management of its residual risks. (10 marks)

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RM – APR 2023 – L4 – Q1 – Developing Target Market Criteria for Credit Policy

Target Market Criteria, Risk Acceptance Criteria, Credit Policy Manual, Sector Identification, Banking Engagement, Risk Appetite, Strategic Sectors

As the Chief Risk Officer of Excellence Bank PLC, you have been charged to develop a Target Market Criteria (TMC) or Risk Acceptance Criteria (RAC) to be incorporated into the bank’s Credit Policy Manual.

Explain the factors that will inform the strategic identification of sectors or areas in which the bank decides to engage in and the depth of such engagement. (20 marks)

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QMDM – APR 2023 – L2 – Q6 – Compound Interest and Annuity Calculations

Explain compounding terms, calculate monthly installment and semiannual deposits.

a) A petty trader has expressed interest in the purchase of a flat screen TV set from Mr. Obudan, a vendor who operates a hire purchase business. A TV set worth GHS780 may be purchased from Mr. Obudan by making GHS80 down payment and the balance in monthly installments for 2 years.

(i) Explain (in your own words) the term “charges 15% (per annum) compounded monthly” to the petty trader. [5 Marks]

(ii) Calculate the monthly installment of Mr. Obudan charges 15% compounded monthly, and the first installment is due in one month. [7 Marks]

(b) The petty trader has made semiannual deposits of GHS500 for 5 years into a savings fund paying interest. at 6.25% (per annum) compounded semiannually.

(i) Explain (in your own words) the term “charges 6.25% (per annum) compounded seminally” to the petty trader. [5 Marks]

(ii) Calculate the amount to be deposited semiannually for 2 years to bring the fund up to GHS 10,000,00. [8 Marks]

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QMDM – APR 2023 – L2 – Q5 – Probability and Cost Analysis for Faulty Items

Relationship in skewed data, probabilities of faulty items, evaluate inspector hiring.

Nawaoo is a registered company in the Central Region specialized in electronic products. Nawaoo is involved in manufacturing high-quality electrical equipment. Each item produced costs GHS 6,000.00 and the total output is 500 items. At the end of the production process, each item is individually tested for quality and safety. If the item is defective in any way it is scrapped at a complete loss to the firm, since it has been found not to be cost-effective to repair such items. Historically, one item in 1000 is found to be faulty in some way.

(a) What is the relationship between the mean, mode and median in a non-symmetric data? [7 Marks]

(b) Determine the probability that the firm will produce zero faulty items in a year. [6 Marks]

(c) Determine the probability that the firm will produce no more than three faulty items in a year. [6 Marks]

(d) The firm is considering employing a quality inspector at an additional cost of GHS1000 per year. The Inspector, however, will be able to prevent any item from being defective. Suggest how the firm might evaluate whether employing the inspector would be cost-effective. [6 Marks]

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QMDM – APR 2023 – L2 – Q4 – Time Series Forecasting for Chocolate Consumption

Explain terms, forecast next four periods with seasonality and average trend for chocolate data.

The following data is number of bars of chocolate consumed by ladies in a tertiary institution in Ga-East Municipal area.

T 1 2 3 4 5 6 7 8
Y 986 1245 902 704 812 1048 706 514
(a) Explain the terms de-seasonalized trend, seasonal index and forecast value in relation to the data above. [7 Marks]
(b) Forecast with seasonality and average trend the values for the next four periods of the above time series. [18 Marks]

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QMDM – APR 2023 – L2 – Q3 – Regression Analysis for Mistakes and Checks

Analyze mistakes vs. checks data with scatter plot, regression, determination coefficient, and prediction.

Yaa Tabua Travel arrange a large number of holidays, and in some of these they make administrative mistakes. They are about to change their quality control procedures, and have done some experiments to see how the number of mistakes varies with the number of checks. The following table shows their findings:

Checks 0 1 2 3 4 5 6 7 8 9 10
Mistakes 92 86 81 72 67 59 53 43 32 24 12
(a) Draw a scatter plot of the data; identify the independent variable, x, and the dependent variable, y. [5 Marks]
(b) Determine the least square estimates of the regression constant, a, and the regression coefficient, b. i.e y=a+bx. [4 Marks]
(c) Comment on your estimates in (b) above. [2 Marks]
(d) Calculate the coefficient of determination. [6 Marks]
(e) Using your line in (b), predict how many mistakes Yaa Tabua would expect with 20 checks and comment on its reliability. [4 Marks]
(f) Use your estimate in (d), to comment on the suitability of your estimate in (e) above. [4 Marks]

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QMDM – APR 2023 – L2 – Q2 – Decision Tree for Construction Contract

Explain EMV, draw decision tree, recommend contractor based on probabilities and payoffs.

Taaboa a manufacturing firm has decided to capitalize on its existing success by building an extension to its production plant to come on stream by 2028. The firm has evaluated the decision and calculated that its profitability will improve by GHS 650,000.00 if the extension is completed on time. If, however, the extension is delayed then, because of contractual production commitments, the firm stands to lose some GHS 350,000.00. The firm has invited tenders for the construction work and two contractors have been shortlisted. Contractor A has indicated that they would undertake all the work themselves and that they have a track record such that 75 % of previous jobs have been completed on time. Contractor B, on the other hand, has a track record of 95 % of jobs being completed on time where Contractor B has done all work. However, Contractor B occasionally subcontracts work to other companies – some 30% of their jobs have a subcontract element in them. Their completion rate on jobs involving subcontractors is less impressive, with 40% of such jobs not being completed on time.

(a) Explain (in your own words) the term expected monetary value to the manager of Taaboa. [5 Marks]

(b) Draw a decision tree for the situation Taaboa faces. [15 Marks]

(c) Using this information, recommend which of the two shortlisted contractors should Taaboa give the job. [5 Marks]

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QMDM – APR 2023 – L2 – Q1 – Frequency Distribution and Charts for Patient Heights

Explain differences in charts, construct frequency table and charts for heights of 40 patients.

Central Legon Hospital in Accra recorded the Height (in cm) of 40 patients reporting to the OPD in a day and come up with the following figures:

150 141 158 147 132 153 176 162 180 165 174 133 129 119 133 188 190 165 157 146 161 130 122 169 159 152 173 148 154 171 136 155 141 153 147 168 150 140 161 185

(a) Explain (briefly) the difference between a percentage frequency bar chart and cumulative percentage frequency bar graph for the height of the 40 patients to the director of the Central Legon Hospital. [5 Marks]

(b) Using classes 110 – 119,120 – 129,130 – 139 and so on, construct a frequency distribution table for the heights of the 40 patients. [10 Marks]

(c) Using (b) above, a percentage frequency bar chart and a cumulative percentage frequency bar chart on the same graph. i.e. super – impose the cumulative percentage frequency chart on percentage frequency bar chart. [8 Marks]

(d) Comment on your charts in (c) above. [2 Marks]

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PBL – APR 2023 – L1 – Q8 – Ingredients of a Valid Contract

State the ingredients for a valid contract beyond intention to create legal relations.

“A contract is an agreement with the intention to have legal relations”. State the other ingredients for a valid contract. (20 marks)

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PBL – APR 2023 – L1 – Q7 – Bank’s Duties to Customers

Discuss the legal duties a bank owes to its customers.

Discuss the legal duties that a bank owes to its customers. (20 marks)

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