BBA603 & ROLE OF INTERNATIONAL FINANCIAL INSTITUTIONS

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ASSIGNMENT

DRIVE FALL	WINTER 2014
PROGRAM	Bachelors of Business Administration- BBA
SUBJECT CODE & NAME	BBA603 & ROLE OF INTERNATIONAL FINANCIAL INSTITUTIONS
SEMESTER	6
BK ID	B1905
CREDITS	4
MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

1 Give introduction to international finance. Explain the benefits, scope of international finance. List the advantages and disadvantages of globalization.

Answer : International finance is the branch of financial economics broadly concerned with monetary and macroeconomic interrelations between two or more countries. International finance examines the dynamics of the global financial system, international monetary systems, balance of payments, exchange rates, foreign direct investment, and how these topics relate to international trade.

Sometimes referred to as multinational finance, international finance is additionally concerned with matters of international financial

2 Write short note on:

Ø  Balance of Payment

Ø  Current account

Ø  Capital account

Ø  Foreign exchange reserves

Ø  Accounting equilibrium

Answer : Balance of Payment :  Balance of Payments is the record of a country’s transactions with the rest of the world. Terms like trade surplus and deficit are used to describe if the country has more or exports than imports or imports than exports. More specifically, a country has trade surplus if value of exports

Ø  Current account : The current account consists of the balance of trade, net factor income and net cash transfers. The current account balance is one of two major measures of a country's foreign trade

Ø  Capital account : A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public and private international investments flowing in and out of a country. A capital account deficit shows that more money is flowing out of

Ø  Foreign exchange reserves : Deposits of a foreign currency held by a central bank. Holding the currencies of other countries as assets allow governments to keep their currencies stable and reduce the effect of

Ø  Accounting equilibrium : the state of balance in the economy where supply equals demand or a country’s balance of payments is neither in deficit nor in excess. The state in which

Q.3 Explain cash-in-advance and write the process of issuing letter of credit and different types of letter of credit.

Answer :  Cash in Advance

The cash-in-advance constraint (sometimes known as the Clower constraint after American economist Robert Clower)[1] is an idea used in economic theory to capture monetary phenomena. In the most basic economic models (such as the Walras model or the Arrow–Debreu model) there is no role for money, as these models are not sufficiently detailed to consider how people pay for goods, other than to say

Q. 4  Write down the differences between GATT and WTO. Explain the problems and achievements of GATT & WTO.

Answer: Difference between WTO and GATT:-

The World Trade Organization is not a simple extension of GATT; on the contrary, it completely replaces its predecessor and has a very different character. Among the principal differences are the following:

The GATT was a set of rules, a multilateral agreement, with no institutional foundation, only a small associated secretariat which had its origins in the attempt to establish an International Trade Organization in the 1940s. The WTO is

5 Explain the main functions of banks. Write down the lending activities and lending policies of bank.

Answer: Functions of banks

A. Primary Functions of Banks ↓

The primary functions of a bank are also known as banking functions. They are the main functions of a bank. These primary functions of banks are explained below.

1. Accepting Deposits

Q.6 Write the objectives of global financial regulation. Explain the key features of Basel III and its impact.

Answer:  Aims of regulation

The objectives of financial regulators are usually:

·         Market confidence – to maintain confidence in the financial system

·         Financial stability – contributing to the protection and enhancement of stability of the financial system

·         Consumer protection – securing the appropriate degree of protection for consumers.

·         Reduction of financial crime – reducing the extent to which it is possible for a regulated business to be used for a purpose con

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