Page 210 - CAPE Financial Services Syllabus Macmillan_Neat

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02269020/CAPE/KMS 2016 SPEC

FINANCIAL SERVICES STUDIES
UNIT 2 - PAPER 02

KEY AND MARK SCHEME

(c) (ii) Liquidity/solvency

If the student had stated that the sanction will affect
assets by reduction litigation reserves. Then liquidity will
be affected, the extent depends on how much money or cash
is set aside for this reserve.

If liabilities where stated as withdrawals (and also assets
through required reserves and excess reserves). Then
liquidity will be affected (reserves).

Equity or stock sales then this will affect capital which
will affect solvency.

If candidate does not provide a definition of solvency or
liquidity but the general idea of what these are, is clearly
expressed in answer award 2 marks.

4 marks should be given for explanation