What is the difference between real and nominal interest rates? [

Assignment Questions                                                                            [15 Marks]

 

1. Which act/s in the US Banking Sector supports the lifeline banking service? [1Mark]
2. Explain the different services that are covered under Lifeline Banking for low-income people.                                                                                                                                 [2 Marks]

 

1. What are the different non-deposit sources of funds for banks? [1Mark]
2. Explain the risks for the banks especially associated with non-deposit sources of funds.                                                                                                                                 [2 Marks]

 

1. What is the difference between real and nominal interest rates? [1Mark]
2. Explain the concept of Interest Rate Determination in the light of the Loanable Fund Theory.                                                                                                                                 [2 Marks]

 

1. What are financial derivatives? [1Mark]
2. Explain the process of a financial Put Option with the help of an example.         [2 Marks]

 

1. What is the difference between an Asset sensitive and a Liability sensitive firm? [1Mark]

If interest-sensitive assets (ISA) and interest-sensitive liabilities (ISL) of a financial firm are $125 million & $100 million respectively, what will be its interest-sensitive GAP (IS GAP)? Calculate the Relative IS GAP ratio for the same financial institution and comment, Is that firm Asset sensitive?