3 questions

Cat 1 and 2

Answer question one and any other two questions

1. a. Explain how banks handle the following type of risk( 10 marks)

i. liquidity risk

ii. credit risk

iii. interest rate risk

iv. Trading risk

2 . Explain how the central bank of Kenya implements the following three types of                 financial sector regulation (10 marks)

i. Systemic regulation

ii. Prudential regulation

iii. Conduct of business regulation

3 How does moral hazard affects both stock and bond financing ( 10 marks)