All India Management Association (AIMA) 2007 M.B.A Marketing Management Central Banking
Friday, 01 February 2013 11:25Web
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Liquidity risk is not just a concern for insurers. It's a risk that has helped to cripple all manner of companies from banks to fund managers to manufacturers and has played this year a key role in the fall in fortunes of energy risk management giant Enron. Yet it has proved problematic to define,measure and the best practices associated with managing liquidity are in a state of flux.
END OF CASELET 3
Caselet 4
learn the caselet carefully and ans the subsequent question:
5. Discuss the essential components of a bank's deposit pricing policy. ( 12 marks)
The Bank prices all credit products according to market conditions and as per the subsequent specific criteria:
• The Bank's cost of funds;
• Competitive sources of funds for borrowers;
• The Bank's option investment opportunities;
• The Bank's cost of delivering products (general and administrative expenses); and Bank profitability targets.
To effectively minimize funding costs through effective deposit pricing decisions, you need to do 3 things:
a. Implement an effective deposit pricing process.
b. Use financially sound pricing tools in making your pricing decisions.
c. Use segmentation techniques to avoid paying up for non-rate sensitive deposits. An effective deposit pricing process includes:
• Making sure you have the right type of info to make decisions.
• Dividing deposit accounts into sectors.
• Developing a pricing rule for every sector.
END OF CASELET 4
END OF part B
part C : Applied Theory (20 Marks)
• This part consists of ques. with serial number six - 7.
• Answer all ques..
• Marks are indicated against every ques..
• Do not spend more than 25 - 30 minutes on part C.
6. Advances cover all kinds of lending and must satisfy the bank's need for security and its wish to have the money repaid on the due date. elaborate the various kinds of advances offered by banks? ( 10 marks)
7. Both monetary and fiscal policies are important policies for any country. These policies have various objectives. discuss the objectives of both of these policies and state how these policies differ from every other. ( 10 marks)
| Earning: Approval pending. |
