BBA603 & ROLE OF INTERNATIONAL FINANCIAL INSTITUTIONS

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ASSIGNMENT

DRIVE	FALL 2016
PROGRAM	BBA
SEMESTER	IV
SUBJECT CODE & NAME	BBA603 & ROLE OF INTERNATIONAL FINANCIAL INSTITUTIONS
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.

Question. 1. Explain the Balance of Payment (BOP) accounting with sources and uses of funds with examples.

How is accounting equilibrium different from accounting disequilibrium? What are the different approaches to adjustments?

Answer: The balance of payments, also known as balance of international payments and abbreviated BoP, of a country is the record of all economic transactions between the residents of the country and the rest of the world in a particular period (over a quarter of a year or more commonly over a year). These transactions are made by individuals, firms and government bodies. Thus the balance of payments includes all external visible

Question. 2. “There are four broad products in the derivatives market such as forwards, futures, options and swaps”. Illustrate.

Answer: A derivative is a financial instrument whose value is based on one or more underlying assets. In practice, it is a contract between two parties that specifies conditions - especially dates, resulting values of the underlying variables, and notional amounts - under which payments are to be made between the parties.

Derivatives are broadly categorized by the relationship

Question. 3. “The common currency Euro has eliminated the need to maintain different national currencies within the Euro zone and, thus, making the workings of a single market easier”. Explain.

Answer: Every national currency around the globe is subject to identical market laws and its value changes according to the same factors that influence all other currencies. Within the Eurozone, all countries share the same currency - the euro, and are less affected by changes in the euro exchange rate.

There are many advantages of the euro adoption by the countries in the Eurozone, despite that disadvantages also exist, and the most well known are the following: obliteration of the existing exchange rate fluctuations between a number of currencies and reduction of transaction costs (no other currency is necessary when conducting business or travelling in the Eurozone). The single European currency also stimulates trade activities and

Question. 4. What are the different determinants in exchange rates? Explain all of them.

Answer: Aside from factors such as interest rates and inflation, the exchange rate is one of the most important determinants of a country's relative level of economic health. Exchange rates play a vital role in a country's level of trade, which is critical to most every free market economy in the world. For this reason, exchange rates are among the most watched, analyzed and governmentally manipulated economic measures. But exchange rates matter on a smaller scale as well: they impact the real return of an investor's portfolio. Here we look at some of the major forces behind exchange rate movements.

Question. 5. Illustrate the roles played by United Nations Conference on Trade and Development (UNCTAD)

Answer: The United Nations Conference on Trade and Development (UNCTAD) was established in 1964 as a permanent intergovernmental body.

UNCTAD is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues. The organization's goals are to: "maximize the trade, investment and development opportunities of developing

Question. 6. What do you understand by Dodd-Frank Wall Street Reform and Consumer Protection Act?

Answer: The Dodd-Frank Wall Street Reform and Consumer Protection Act is a massive piece of financial reform legislation passed by the Obama administration in 2010 as a response to the financial crisis of 2008. Named after sponsors U.S. Senator Christopher J. Dodd and U.S. Representative Barney Frank, the act's numerous provisions, spelled out over roughly 2,300 pages, are being implemented over a period of several years and are intended to decrease various risks in the U.S. financial system. The act established a number of new government agencies tasked with overseeing various components of the act and by extension various aspects of the banking system. President-elect Donald Trump has pledged to repeal Dodd-

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