Financial Services
17 Grade 9 Pre-Technical Studies questions on Financial Services, with worked marking schemes. 17 questions are available on this topic in full.
Question 1
4 marksA shopkeeper insures her shop against fire by paying a monthly amount.
(a) Name the regular amount she pays.
(b) Explain the main benefit of taking the insurance.
(4 marks)
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1 markA trader pays a small regular amount to a company so that she will be compensated if her shop is destroyed by fire. This financial service is:
A. A loan
B. A savings account
C. A cheque
D. Insurance
(1 mark)
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1 markA member-owned financial cooperative where members save together and borrow from the pooled savings is a:
A. Stock exchange
B. Insurance broker
C. SACCO
D. Commercial bank
(1 mark)
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1 markA young entrepreneur wants a safe place to keep the day's sales and to earn a little interest on savings. Which financial service institution is most appropriate?
A. An insurance broker selling motor cover
B. A courier company delivering parcels
C. An advertising agency
D. A commercial bank or SACCO offering a savings account
(1 mark)
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1 markWhich body regulates and supervises banks in Kenya to protect customers' money?
A. Kenya Revenue Authority
B. Kenya Ports Authority
C. Central Bank of Kenya
D. Kenya National Examinations Council
(1 mark)
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4 marksExplain how mobile money services such as M-Pesa have improved access to financial services for people in rural Kenya. Give two points.
(4 marks)
Marking scheme
Any two, 2 marks each: allows people far from banks to send, receive and store money using a phone (2 marks); enables paying bills, buying goods and saving without travelling to a bank branch (2 marks); provides quick, convenient and relatively cheap transactions and a record of payments (2 marks).
Question 7
5 marksDistinguish between saving and borrowing as financial activities, and give one situation when borrowing is appropriate.
(5 marks)
Marking scheme
Saving: setting aside part of one's income or money for future use, usually earning interest (2 marks). Borrowing: obtaining money from a lender that must be repaid, usually with interest (2 marks). Appropriate situation (1 mark): e.g. to start or expand a business, pay school fees, or handle an emergency when one's savings are not enough.
Question 8
1 markWhich of the following is a benefit of saving money in a bank rather than keeping it at home?
A. It can never be withdrawn
B. It automatically doubles each week
C. The money loses value faster
D. The money is kept safe and can earn interest
(1 mark)
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4 marksState two risks a person faces when taking a loan and one way to manage each risk.
(4 marks)
Marking scheme
Two risks with management, 2 marks each: Failure to repay/default leading to loss of security — borrow only what you can repay and plan repayments (2 marks); High interest making repayment costly — compare lenders, choose lower interest and read terms carefully (2 marks); Over-borrowing/debt trap — budget and borrow only for productive purposes (2 marks).
Question 10
4 marksA group of ten market traders in Nakuru decide to form a SACCO.
(a) State what a SACCO is.
(b) Give two benefits the traders will get from it.
(4 marks)
Marking scheme
(a) A SACCO is a savings and credit cooperative society owned by its members, where members save together and can borrow from the pooled funds (2 marks). (b) Any two (1 mark each): access to affordable loans; encourages regular saving; members share in profits/dividends; financial support during emergencies; members control the society.
Question 11
4 marksExplain the difference between a debit card and a credit card.
(4 marks)
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3 marksState three reasons why it is important for a young person to open and use a savings account.
(3 marks)
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1 markA young entrepreneur wants to keep business money safe, earn some interest, and be able to withdraw when needed. Which financial service institution is BEST suited to meet these needs?
A. A welfare merry-go-round only
B. Keeping cash under the mattress
C. A hardware shop
D. A commercial bank
(1 mark)
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1 markWhich financial institution is licensed to accept deposits, keep customers' money safe and give loans?
A. A hardware shop
B. A hospital
C. A commercial bank
D. A supermarket
(1 mark)
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1 markThe extra amount a bank charges a customer for borrowing money as a loan is called:
A. Withdrawal
B. Interest
C. Deposit
D. Balance
(1 mark)
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1 markA Grade 9 learner in Kenya wants to save small amounts of money and access it easily using a mobile phone. The MOST appropriate service is:
A. A logbook
B. Mobile money (e.g. M-Pesa)
C. A land title
D. A fixed asset
(1 mark)
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1 markA card that allows a customer to spend only the money already in their bank account is a:
A. Loyalty card
B. Library card
C. Credit card
D. Debit card
(1 mark)
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