Question One

a$.$ Using the article "Understanding the Growth of African Financial Markets" by Mihasonirina Andrianaivo and Charles Amo Yartey answer the following:

i$.$ Explain the problem being investigated citing all the variables.

$[3$ Marks$]$

ii$.$ Explain the determinants of financial market development.

$[4$ Marks$]$

b$.$ The Zambian capital market revealed that the ABSA corporate bond with a $K1,000$ face value and K$80$ annual coupon payment is trading at K$970.$

i$.$ Calculate the current yield.

$[3$ Marks$]$

ii$.$ Reasonably ascertain whether or not the bond is selling at a discount or premium.

$[4$ Marks$]$

iii. Explain any three short$-$comings of the current yield as a financial measure. $[4$ Marks$]$