Agricultural finance and credit management UE Past Papers Questions.

Agricultural credit is crucial for the development of the sector in all sub-Saharan African countries. Explain how cooperatives may help to contend with challenges that financial institutions experience in their effort to provide agricultural credit to smallholder producers.

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UNSOLVED

A bank officer has to make some critical decisions regarding assets that were submitted by a prospective borrower as possible loan collateral. However, on one part has to request an expert to assess the value of a list of assets and such a request has to be done with a succinct outline of which exact method should be applied to reach at a reasonable value for each item.

1. What methods would you suggest to be used for each of the following assets? Present your answer in form of short notes:

1. Assets that will be sold within a year
2. Regular operational supplies
3. Capital assets e.g, machinery
4. Buildings and farm structures

2. on the other part, he has to try and establish the future value of a financial asset i.e subject it to a time value of money assessment. The asset is currently priced at US$ 50,000 and will be earning an interest of 10% per annum for the next five years. What would be the value of this asset by the end of the fifth year?

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An asset has a value of Tsh. 1,500 and it is foreseen to live for 6 years. It is by then expected to have a salvage value of Tsh 75. Calculate and show annual depreciation of this asset by using two methods: one method should assume a constant rate of loss of value and the other method should take into consideration that the loss of value of an asset cannot be constant over the whole of its life.

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Write short notes of the following financial instruments

1. Treasury bill
2. Commercial paper
3. Bankers acceptance note
4. A certificate of deposits

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Collateral is an asset pledged as security by borrowers until their loans are repaid. It serves as a screening device to reduce wilful default. In a way, borrowers providing large collateral are signalling an intention to maintain good faith and pure efforts to fulfill their contracts. Outline the qualities of good collateral in agricultural lending?

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UNSOLVED