Economics Paper 2, May/June 2011  
Questions: 1 2 3 4 5 6 7 8 9 10 11 12 Main
General Comments

Question 9

(a)      Differentiate between shares and debentures.
(b)     Identify any four problems encountered by farmers in raising capital.


This question appeared to be unpopular with the candidates. Most of the candidates who attempted this question could not give a clear distinction between shares and debentures, in the (a) part.  The (b) part was also not well attempted.  Candidates were expected to write down some of the following in details to score good marks in this question:

(a)      A share is the smallest unit into which the capital of a company is divided.  It is a unit of ownership of a business concern while a debenture is a loan capital or corporate bond.  A debenture holder is a creditor to a company.

(b)     (i)      low level of loanable funds;
          (ii)      inability of firms to produce the required collateral facilities;
          (iii)     under-developed money and capital markets;

  1. high cost of loans;
  2. fluctuation of share prices;
  3. Government financial regulation.


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