Question 4 a) With the recent projection of an integrated regional trade bloc in Africa, AfCFTA, most companies are considering large expansions that will enable them take advantage of increased markets. This has the potential of affecting profits of local companies in a positive way. Akuaba Fabrics, a local textile manufacturing business wants to expand and it is considering alternatives of raising needed funds for this large intended growth. Owners of Akuaba Fabrics have approached you as a financial expert seeking guidance on which approach to raise the needed funds. Write a page document, indicating their possible options in raising the needed in meeting this prospect intended growth. CR, 10 capital of b) The Securities and Exchange Commission (SEC) have certified some financial institutions as securities firms to aid newly incorporated companies in the raising of needed capital for their business. These firms assisting the raising of capital are at liberty in the choice of approaches in underwriting the raising of capital. The choice of approach is mostly dependent on the survival prospects of the issuing business as seen by the securities firm or investment banks. Evaluate the methods that are available to these financial institutions is assisting in the raising of capital. EV, 10 c) The need for a better retirement, most people make plans. Your neighbor, Mr. Kennedy is nearing retirement. He is concerned with having an equal and stable stream of income in the periods after his retirement. His son, 23-year-old Kofi will also want to begin an investment package to make big money in the near future for his retirement also. Mr. Kennedy and his son insist on having the same investment package despite the differences in their risk tolerance levels. Based on your knowledge in finance and financial markets, carefully advise them on their desire to hold similar investments and suggest to them appropriate investments. CR,5 TOTAL (25MARKS Question 3 a) An investment banker agrees to underwrite an issue of 30 million shares of stock for Carly Grey Construction Corp. on a firm commitment basis. The investment banker pays $26.50 per share to Carly Grey Construction Corp. for the 30 million shares of stock. It then sells those shares to the public for $27.35 per share. How much money does Carly Grey Construction Corp. receive? What is the profit to the investment banker? If the investment bank can sell the shares for only $25.75, how much money does Carly Grey Construction Corp. receive? What is the profit to the investment banker? AN,10 b) Suppose, instead, that the investment banker agrees to underwrite only 20 million shares on a best-efforts basis. The investment banker is able to sell 18 million shares for $15.50 per share, and it charges Carly Grey Construction Corp. $0.375 per share sold. How much money does Carly Grey Construction Corp. receive? What is the profit to the investment banker? If the investment bank can sell the shares for only $14.75, how much money does Carly Grey Construction Corp. receive? What is the profit to the investment banker? AP,5 c) Based on your estimations from the above questions (a) and (b), explain the key activity areas for securities firms? How does each activity area assist in the generation of profits, and what are the major risks for each area? AN,10 TOTAL (25MARKS] Question 2 a) The securities and exchange commission warned the customers of the erstwhile Menzgold against dealings. Menzgold was a dealer in gold trading. Investors in that venture were not allowed to make direct deposits to the institutions. Investors had to purchase gold from a third party and make gold deposit at Menzgold. Show your understanding on the reasons why Menzgold could not accept cash deposits directly from its customers. AP,10 b) Depository institutions offer multiple services in banking and finance. Despite their importance, some customers may or may not be inclined to use them. As a financial market analyst, explain why customers may or may not bypass the services rendered by depository institutions in the financial space. AN,10 c) Financial institutions may offer services that do not require customers to makes deposits with them. However, these institutions offer services that require customers to make periodic payments for a future payment in an event of an uncertain and adverse event. Per your understanding, evaluate some of the institutions and services offered to customers in their quest to mitigate risks of the occurrence of an unlikely event EV,5 EMADVSI Question 1 a) There have been arguments on the relevance or otherwise of financial institutions in most economies. Some have argued about the irrelevance of financial institutions and the profit rip-off they make from people. In Ghana, the recent banking crises gave reason to this argument of irrelevance to the financial institutions. However, there is the other side that support the existence of financial institutions. They argue that in the conduct of business, financial market participants such as lenders and borrowers need each other for business. This has been known to be a cumbersome task in the absence of financial institutions. Arguing for the latter group, carefully evaluate the importance of financial institutions in the financial space in bridging the gap between excess fund holders and fund seekers. EV,10 b) For the reasons of mitigating the risks of holding cash on hand, savers of funds often seek to transfer risks of holding the funds to financial institutions who take these funds as deposits. For holding these funds and the assumption of risks, financial institutions in tend charge a percentage on these deposits. Despite the risks and the charge on deposits, financial institutions are considered as managers who seek to create wealth with collected funds from savers. As a manager of a financial institution, outline some of the inherent risks of financial institution in their conduct as intermediaries. CR,10 c) Differentiate between the role of financial institutions as their role as a brokers and their role as asset transformers. AN,5 TOTAL [25MARKS)