Fin401,402,403

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Economics

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Answe 13 question

Avoid plagiarism, the work should be in your own words,

  • Q1What are the different types of risks the banks and other financial institutions are exposed to?
  • Q2 What are the Asset-Liability Management Strategies? Explain.
  • Q3 Explain the loanable fund theory of Interest Rate Determination.
  • Q4 What are the different types of derivatives? Take an example and explain Interest rate swaps.
  • Q5 Calculate the interest-sensitive GAP (IS GAP) and Relative IS GAP ratio for a financial institution if interest-sensitive assets (ISA) are $100 million and interest-sensitive liabilities (ISL) are $125 million. Is that firm an Asset sensitive? Explain.
  • --------------
  • Q1: Why do most investors prefer to hold a diversified portfolio of securities as opposed to placing all of their wealth in a single asset?
  • Q3: Explain the benefits derived from investing in deep discount bonds.
  • Q4: Explain how to manage bond portfolios and what are the portfolio management strategies.
  • _____________

  • is a Mini Project. There is a topic “THE ROLE OF MONETARY POLICY IN FINANCIAL STABILITY” You have to select any country to explain how monetary policy helped country to stabilize financial system after a financial crisis.Write your answer by following these headings:
    • The functions of monetary policy (In general) (1000 words )
    • Role of monetary policy in financial stability (In general) (1000 words)
    • Describe the reasons for its financial crisis (about your selected country) (1000 words)
    • Impact of financial crisis on economy (about your selected country) (1000 words)
    • How monetary policy contributed in stabilizing economy (about your selected country) (1000 words)


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‫المملكة العربية السعودية‬ ‫وزارة التعليم‬ ‫الجامعة السعودية اإللكترونية‬ Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University College of Administrative and Financial Sciences Assignment 2 FIN402 (1st Term 2022-2023) Deadline: 29/10/2022 @ 23:59 (To be posted on BB in Week 8 (16/10/2022) Course Name: Financial Institutions and Markets Course Code: FIN-402 Student’s Name: Semester: 1st CRN: Student’s ID Number: Academic Year: 1443/1444 H, 1st Term For Instructor’s Use only Instructor’s Name: Students’ Grade: /10 Level of Marks: High/Middle/Low Instructions – PLEASE READ THEM CAREFULLY • • This assignment is an individual assignment. Due date for Assignment 2 is (29/10/2022) • The Assignment must be submitted only in WORD format via allocated folder. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented; marks may be reduced for poor presentation. This includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submission will NOT be accepted. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). Submissions without this cover page will NOT be accepted. Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University ‫المملكة العربية السعودية‬ ‫وزارة التعليم‬ ‫الجامعة السعودية اإللكترونية‬ College of Administrative and Financial Sciences Assignment Purposes/Learning Outcomes: After completion of Assignment-2 (Mini Project) students will be able to: LO1.Demonstrate an awareness of the variety of financial instruments. LO2. Examine the role of the financial system in the economy and the rationale for financial intermediation. Assignment Question: (10 Marks) Students must use proper references to justify their assignment work. Assignment 2 is a Mini Project. There is a topic “THE ROLE OF MONETARY POLICY IN FINANCIAL STABILITY” You have to select any country to explain how monetary policy helped country to stabilize financial system after a financial crisis. Write your answer by following these headings: 1. The functions of monetary policy (In general) (1000 words ) 2. Role of monetary policy in financial stability (In general) (1000 words) 3. Describe the reasons for its financial crisis (about your selected country) (1000 words) 4. Impact of financial crisis on economy (about your selected country) (1000 words) 5. How monetary policy contributed in stabilizing economy (about your selected country) (1000 words) Answers: College of Administrative and Financial Sciences Assignment-2 Investment (FIN403) Deadline: (30/10/2022 @ 23:59 PM) Course Name: Investment Course Code: FIN403 Student’s Name: Trimester: 1st CRN: Student’s ID Number: Academic Year: 1443/1444 H, 1st Trimester For Instructor’s Use only: Instructor’s Name: Dr Students’ Grade: /10 Level of Marks: High/Middle/Low Instructions – PLEASE READ THEM CAREFULLY • This assignment is an individual assignment. • The Assignment must be submitted only in WORD format via allocated folder on Blackboard. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented. This also includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submitted assignments will NOT be entertained. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). Submissions without this cover page will NOT be accepted. Assignment Questions Q1: Why do most investors prefer to hold a diversified portfolio of securities as opposed to placing all of their wealth in a single asset? Q2: Given the following financial data, compute: a. Return on equity. b. Quick ratio. c. Long-term debt to equity. d. Fixed-charge coverage. Assets: Cash Accounts receivable Inventory Fixed assets Total assets $ 2,500 3,000 6,500 8,000 $20,000 Liabilities and stockholders’ equity: Short-term debt Long-term debt Stockholders’ equity Total liabilities and stockholders’ equity $ 3,000 2,000 15,000 $20,000 Income before fixed charges and taxes Interest payments Lease payment Taxes (35 percent tax rate) Net income (after-taxes) $ 4,400 800 400 1,120 $ 2,080 Q3: Explain the benefits derived from investing in deep discount bonds. Q4: Explain how to manage bond portfolios and what are the portfolio management strategies. ‫المملكة العربية السعودية‬ ‫وزارة التعليم‬ ‫الجامعة السعودية اإللكترونية‬ Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University College of Administrative and Financial Sciences Assignment 2 Deadline: 29/10/2022 @ 23:59 Course Name: Bank Management Course Code: FIN401 Student’s Name: Trimester: 1st CRN: Student’s ID Number: Academic Year: 1443/1444 H, 1st Term For Instructor’s Use only Instructor’s Name: Students’ Grade: /10 Level of Marks: High/Middle/Low Instructions – PLEASE READ THEM CAREFULLY • • This assignment is an individual assignment. The due date for Assignment 2 is 29/10/2022 • The Assignment must be submitted only in WORD format via the allocated folder. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling in your information on the cover page. • Students must mention the question number clearly in their answers. • Late submission will NOT be accepted. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answers must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). Submissions without this cover page will NOT be accepted. Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University ‫المملكة العربية السعودية‬ ‫وزارة التعليم‬ ‫الجامعة السعودية اإللكترونية‬ College of Administrative and Financial Sciences Assignment Questions [10 Marks] 1. What are the different types of risks the banks and other financial institutions are exposed to? [2 Marks] 2. What are the Asset-Liability Management Strategies? Explain. [2 Marks] 3. Explain the loanable fund theory of Interest Rate Determination. [2 Marks] 4. What are the different types of derivatives? Take an example and explain Interest rate swaps. [2 Marks] 5. Calculate the interest-sensitive GAP (IS GAP) and Relative IS GAP ratio for a financial institution if interest-sensitive assets (ISA) are $100 million and interest-sensitive liabilities (ISL) are $125 million. Is that firm an Asset sensitive? Explain. [2 Marks]
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Explanation & Answer

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‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬

Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University

College of Administrative and Financial Sciences

Assignment 2 FIN402 (1st Term 2022-2023)
Deadline: 29/10/2022 @ 23:59
(To be posted on BB in Week 8 (16/10/2022)
Course Name: Financial Institutions
and Markets
Course Code: FIN-402

Student’s Name:

Semester: 1st

CRN:

Student’s ID Number:

Academic Year: 1443/1444 H, 1st Term
For Instructor’s Use only
Instructor’s Name:
Students’ Grade: /10

Level of Marks: High/Middle/Low

Instructions – PLEASE READ THEM CAREFULLY




This assignment is an individual assignment.
Due date for Assignment 2 is (29/10/2022)

• The Assignment must be submitted only in WORD format via allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented; marks may be reduced
for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.

Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬

College of Administrative and Financial Sciences
Assignment Purposes/Learning Outcomes:
After completion of Assignment-2 (Mini Project) students will be able to:
LO1.Demonstrate an awareness of the variety of financial instruments.
LO2. Examine the role of the financial system in the economy and the rationale for
financial intermediation.

Assignment Question:

(10 Marks)

Students must use proper references to justify their assignment work.
Assignment 2 is a Mini Project.
There is a topic “THE ROLE OF MONETARY POLICY IN FINANCIAL STABILITY”
You have to select any country to explain how monetary policy helped country to stabilize
financial system after a financial crisis.
Write your answer by following these headings:
1. The functions of monetary policy (In general) (1000 words )
2. Role of monetary policy in financial stability (In general)
(1000 words)
3. Describe the reasons for its financial crisis (about your selected country) (1000 words)
4. Impact of financial crisis on economy (about your selected country) (1000 words)
5. How monetary policy contributed in stabilizing economy (about your selected country)
(1000 words)
Answers:
1.

The United States' central banking system is known as the Federal Reserve System. As
a result of misconduct by banks and financial institutions following the Great Depression,
Congress created it in 1913. The Federal Reserve's primary responsibility is to maintain the
stability of financial markets and ensure that there is always enough money available to
facilitate commerce in the U.S. economy, but it also plays an important role in controlling

Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬

College of Administrative and Financial Sciences
inflation through monetary policy which affects all other aspects of American life from
housing prices to wages and prices at grocery stores."

The phrase "monetary policy" refers to central banks' actions that affect the amount of
money available in an economy (Alves, et.al 2020). In other terms, it refers to the methods
used by a nation's central bank to oversee its monetary system and choose how much cash is
available for use by consumers or enterprises.

The main goal of monetary policy is to stabilize prices and avoid inflation or
deflation—the latter being when there are too few dollars for everyone to buy things with
them (for example: if you have $100 but only have $100 worth of stuff worth buying).

Monetary policy refers to the actions taken by a country's central bank to control
money supply in the economy. The Federal Reserve System (Fed) is responsible for setting
monetary policy, while other central banks like the European Central Bank (ECB) have also
been given this power.

The role of monetary policy is to ensure stability and growth by controlling inflation
and interest rates, thereby affecting employment and economic growth. To achieve this goal,
several types of policies can be used:


Open Market Operations: This involves buying or selling bonds on

behalf of central banks so they can influence interest rates or exchange rates through

Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬

College of Administrative and Financial Sciences
their actions on these markets (Alves, et.al 2020). For example, if there are too many
dollars floating around due to high demand for them as an investment vehicle; then
Fed will purchase some bonds from investors willing to sell them at low prices
compared with those offered elsewhere in order reduce supply so demand increases
further which increases value since fewer people would want them now than before
when everyone had enough savings accounts where everything was safe...

It is usually used to stabilize the economy and avoid inflation or deflation. Inflation, or
the general rise in prices, is a sustained increase in the general level of prices. Deflation, or a
sustained decrease in prices, is also possible.
To stabilize a business and prevent inflation or deflation, monetary policy is applied.
The process of controlling the economy's money supply is known as monetary policy. It is
governed by the Federal Reserve System, which may still boost or restrain development while
regulating rates and other monetary measures to help keep inflation at a manageable level
(Alves, et.al 2020). The Fed has two options for stimulating the economy: lowering interest
rates and expanding the money supply; or raising interest rates and reducing the money supply
to combat inflationary pressures brought on by an excessive rise in expenditure.

The Federal Reserve System, sometimes referred to as the Fed, is in charge of
monetary policy in the United States. The American central bank is known as the Federal
Reserve System. It was established in 1913 and primarily handles payment services, bank
regulation, and monetary policy.

Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬

College of Administrative and Financial Sciences
The Fed controls how much money gets printed by banks so they can loan more or less
capital to businesses or individuals based on their needs at any given time. It also regulates
these same banks so that they do not engage in excessive risk taking—a practice known as
"casino banking." Finally, it has oversight over national payments systems such as Visa and
MasterCard so that funds can be transferred between different countries without having to go
through another company first (which would slow down transactions).

To counteract a potential recession, it can lower interest rates and increase money
supply.The Federal Reserve can lower interest rates and increase money supply by effective
means. For example, if a recession threatens to occur, the Fed may cut short-term interest
rates to stimulate economic growth (Alves, et.al 2020). This would allow people who are
worried about losing their jobs or their homes (or both) to borrow more money at cheaper
rates than they would otherwise have been able to get from their banks or credit cards. In turn,
this increased access will make it easier for businesses looking for capital investments in order
for them not only make profits but also expand operations and hire more workers.

This increased spending stimulates the economy so much that we might anticipate
inflationary pressures among consumers if too much money is created without having a way
of circulating through its intended channels. This process therefore needs to be carefully
monitored to avoid problems later on when inflation starts taking hold again after periods
where no major shifts occurred, with the exception of perhaps just enough movement toward
one side rather than another might happen over time. This is because they lost jobs due to lack

Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬

College of Administrative and Financial Sciences
of profit margins caused by higher taxes executed under Obama administration policies
intended to aid struggling families survive during recessions like those experienced during the
Great Depression era, when the unemployment rate reached 27% for the entire population,
and they were unable to pay their living expenses.

To fight inflation, it can raise interest rates and decrease money supply. The Federal
Reserve can increase the value of the currency by raising interest rates and decreasing money
supply. If a country has an inflation problem, it will be able to raise interest rates to decrease
the amount of money being printed. In order for this to work, however, there needs to be
something out there for people who want to hold onto their dollars instead of spending them
or exchanging them for goods and services in real life (i.e., not just online). This is why we
need inflation: if prices go up too much then people will stop buying stuff because they can
make more money by investing it instead—and thus avoid paying higher prices!

The Federal Reserve also tries its best not only through monetary policy but also fiscal
policy (government spending) (Alves, et.al 2020). For example: one way they could help
reduce unemployment would be through government stimulus packages designed specifically
around helping certain industries grow faster than others; another way would be through tax
breaks aimed at small businesses so they won't have as much trouble competing against large
corporations when trying to attract new work...


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