AFF 5050 past exam paper (4)

Semester Two Examination 2008

QUESTION 1

Competition in the deregulated financial markets may have contributed positively to


recent bank crashes. Do you agree with this statement? Why or why not?


5 marks
same as before


QUESTION 2
What are the ‘Special Drawing Rights’ (SDR)? What is the purpose of the SDR and which is


the responsible international body for SDR?


5 marks


same as before

QUESTION 3
What were the main reasons for changing Basle I agreement to Basel II agreement?


5 marks 

Risk weights too broad (all commercial loans equal)


Relativity of risk weighting

Portfolio internal correlations

Banks with effective risk management system are not rewarded

Not all risks are considered

Banks have incentive to restructure their business to avoid capital requirement

QUESTION 4


What are the major risks bankers are supposed to assess when participating in project

financing? Provide examples.

5 marks

QUESTION 5
Describe main features of a generic money laundering model and identify main sources of


money laundering. Provide examples.


5 marks


QUESTION 6
Describe the concept of exposure netting with examples.


5 marks
Banks do not consider FX deals in isolation, and focus on hedging as a portfolio of currency positions

-as an example, consider a US based multinational with Korean won receivables and Japanese yen payables. Since the won and yen tend to move in similar directions against the US dollar, the firm can just wait until these accounts come due and just buy yen with won.

Concept: hedging only the net exposure by firms which have both payable and receivables in foreign currencies.


QUESTION 7

What is country risk for international banking? Identify and discuss different components of


country risk with examples.

same as b4

5 marks


QUESTION 8
Discuss different payments methods used in international trade activities. Explain why


international trade is important for international banks?
same as b4


QUESTION 9
Are international commercial banks are different from domestic commercial banks?


Discuss with examples.


5 marks

same as b4

QUESTION 10
Financial market globalisation has not only brought benefits but also brought


substantial costs to consumers. Discuss with examples

sorry, can not find the answer...make it up urself...