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Write a detailed note on the economic performance of Pakistan economy in the last Fiscal year. Highlight the Sector in which the economy performed good and also highlight sectors which have not performed good.
QUESTION ONE
Bank A
ASSETS
Notes and Coins 69
Balances with Bank of Zambia 30
Balance with Banks and other financial institutions in Zambia 0
Balance with Banks and other financial institutions abroad 24
Investments in securities 22
Loans and advances 57
Fixed Asset 78
Other Assets 17
Total Assets 297
Deposits 50
Balances due to Banks and other financial institutions in Zambia 88
Balances due to Banks and other financial institutions abroad 14
Other liabilities 58
Bills of Exchange 0
Other borrowed funds (including Subordinated Debt) 71
Shareholders’ equity 35
Total Liabilities 316
Off Balance Sheet items
Contingent liabilities
Assets pledged as collateral other than a house
Allowance for losses on acceptances and off balance sheet items in other liabilities
Calculate for Banks A: Total Primary Capital, Total Secondary Capital, Eligible Total Capital, current Minimum Total Capital Requirements, and Capital Excess or Deficiency assuming:
a).a foreign majority owned bank b). a Zambian majority owned bank.
This is a question about interest rates. How do I know when to use a period rate rather than an effective annual rate.
Question: A perpetuity pays 40$ per year to infinity.Considering a required rate of return of 10% APR, compounded semi-annually, what is the present value of thr perpetuity. To compute the anwser the apr is converted to EAR.
In which situations would we convert it to a periodic rate. Or do we always convert the APR to an EAR?
Compounding frequency, time value, and effective annual rates For each of the cases in the following table:
- Calculate the future value at the end of the specified deposit period.
- Determine the effective annual rate, EAR.
- Compare the nominal annual rate, r, to the effective annual rate, EAR. What relationship exists between compounding frequency and the nominal and effec- tive annual rates?
Compounding frequency, time value, and effective annual rates For each of the cases in the following table:
- Calculate the future value at the end of the specified deposit period.
- Determine the effective annual rate, EAR.
- Compare the nominal annual rate, r, to the effective annual rate, EAR. What relationship exists between compounding frequency and the nominal and effec- tive annual rates?
Value of an annuity versus a single amount Assume that you just won the state lottery. Your prize can be taken either in the form of $40,000 at the end of each of the next 25 years (that is, $1,000,000 over 25 years) or as a single amount of $500,000 paid immediately.
a. If you expect to be able to earn 5% annually on your investments over the next 25 years, ignoring taxes and other considerations, which alternative should you take? Why?
how the following financial risks can be mitigated and managed by the financial institutions
- market risk
- operational risk
- credit risk
- Liquidity risk
- Insolvency risk
QUESTION ONE
(a) What are derivative instruments?
(b) Explain the types of derivative instruments.
(c) What are the advantages and disadvantages of using derivative instruments?
QUESTION TWO
Discuss the significance of stock markets like the Lusaka Stock Exchange (LuSE) in financial markets and the economy in general. What was the motivation for the Zambian Government to set up the LuSE?
Outline the securities and companies’ listing processes at the LuSE. What factors are taken into account when listing securities and companies on the LuSE?
QUESTION THREE
(a) Discuss in detail the roles played by financial institutions (FIs) in the economy with particular reference to Zambia citing particular examples of financial institutions that you are familiar with in Zambia.
(b) List and explain the major risks that financial institutions in general face? How do these risks manifest or affect the FIs?
QUESTION FOUR
Using appropriate illustrations discuss in detail the factors that affect demand for loanable funds according to the Loanable Funds Theory of interest rate determination.
What impact would these have on demand and supply of funds and on the interest rate?
QUESTION FIVE
(a) Discuss the term Monetary Policy in relation to the Zambian economy.
(b) Zambia as a developing country may have problems in establishing an effective operating Monetary Policy.
(i). Explain at least five major problems which may prevent Zambia from establishing an effective Monetary Policy.
(ii).Describe the main Monetary Policy tools which Zambia may use to influence economic growth.
QUESTION SIX
(a) What is risk management? Discuss the two major ways in which exposure can be managed and/or reduced.
(b) Financial institutions face a number of risks in their operations. How are these risks mitigated or managed? What techniques are used to mitigate each type of risk you have identified?
QUESTION ONE
One of the functions of the Bank of Zambia (BoZ) is to act as the bank of re-discount and lender of last resort.
Required:
a). In detail, demonstrate how the Central bank achieves these particular functions.
b). Identify and explain other central bank functions and illustrate how the Bank of Zambia performs these functions in the management of the financial system in Zambia.
c). Distinguish commercial banks and micro-finance institutions (MFIs) by function and objective
QUESTION TWO
a).What do you understand by the terms ‘financial intermediation’ and ‘financial dis-intermediation’? Explain in detail
b).Outline and explain the problems that would arise in the absence of financial intermediation. c).Explain how financial intermediation overcomes the problems identified in (b) above.
QUESTION THREE
a).Outline and discuss the main risks faced by financial institutions and how they manifest giving practical examples.
b).Discuss how these risks can be mitigated and managed.
QUESTION FOUR
The financial market is composed of products and services provided by financial institutions. Identify and describe the following financial institutions.
a).Identify and explain at least five financial instruments (for each) traded in money and capital markets.
b).distinguish the two types of markets in (a) above.
Every government is expected to perform some key economic roles to ensure sustainable development and improved welfare of the citizenry. Discuss the four key economic functions performed by the government of Ghana indicating how satisfactory or not (with sufficient evidence backing your stand) the current government of Ghana has performed each role.
