3

a). Under what condition do we say a financial market is efficient? Distinguish between weak

and semi-strong form efficiency. 5 marks

b). Explain any five (5) ways a company can raise equity capital in the financial market.

10 marks

c). One of the ways in which the government can finance its fiscal deficit is to borrow funds through the domestic loanable fund market. Explain how this deficit financing strategy of the government can crowd out the domestic private sector and increase interest rate. 10 marks

(Total 25 marks)