DECEMBER 2022
Coventry University
Faculty of Business and Law
7006EFA
INTERNATIONAL BANKING
Instructions to candidates
This is an online examination
Recommended time to complete: 2 hours
Please type your answers in a separate file using Microsoft Word and upload a Word or PDF version to the submission link available on the module Aula page. The exam paper will be released at 09:00 (UK time) on the day of the exam. The submission deadline is 13:00 (UK time) on the day of the exam.
Answer:
Section A: Any FOUR (04) questions from FIVE (05) questions
Section B: Any ONE (01) question from TWO (02) questions
Section A is worth 40% and Section B is worth 60% of the total marks.
The total number of questions in this paper is SEVEN (07)
Marks for each question are as shown
Total marks for the paper is 100.
Faculty of Business and Law School of Economics, Finance and Accounting
Guidance on Online Exams
PLAGIARIASM AND COLLUSION WARNING
This is an individual assessment, and you must ensure that the work you submit is your own. It is not acceptable to copy from another source without acknowledging that it is someone else’s writing or thinking. This includes using paraphrasing as well as direct quotations.
Copying another student’s work, using previous work of your own or copying large sections from a book or the internet are all examples of plagiarism and carry serious consequences. If you have any questions about plagiarism and collusion, please raise these with the module leader before the exam takes place.
This is an online examination. You are permitted to use any appropriate resources in order to complete the assessment (e.g., books, articles, cases, etc). The assessment is designed to replicate an examination – there is no requirement for full footnote/in-text references. However, please note the plagiarism and collusion warning above. Instructions regarding how to complete the examination (including the number of questions you should attempt) are contained within the exam paper. Word-counts for each question are indicated in the paper and should be adhered to.
To accommodate students in different time-zones and those with individual exam arrangements, the exam paper will be released to you at 0900hrs (UK Time) and the submission deadline is 1300hrs (UK Time) on the day of the exam, however it is anticipated that you will need no more than 3 hours to complete the assessment. You will only be permitted to submit your work once, and a similarity report will not be visible. Late submissions will not be marked. Due to the anticipated demands on our IT networks, early submission is STRONGLY encouraged.
Please type your answers in a separate file using Microsoft Word and upload a Word or PDF version to the submission link available on the module Moodle page. Please note that photos of handwritten formulas, calculations, models, diagrams can be included in the document. However, photos of text based answers are not allowed.
Your module leader will be available via email (ac5892@coventry.ac.uk )to clarify any issues relating to the exam paper (but not to provide subject specific support). If you experience any technical difficulties during the exam, please contact IT Services (+44 (0) 24 7765 7777 – select Option 1, or email servicedesk.its@coventry.ac.uk).
If you are unable to complete the assessment, please contact Faculty Registry (FacultyRegistry.fbl@coventry.ac.uk).
Section A
Answer any four (04) questions in Section A
Fully explain the following terms or concepts:
1. | Lerner index | [10 marks] |
2. | Moral hazard | [10 marks] |
3. | Market risk | [10 marks] |
4. | Intermediation approach | [10 marks] |
5. | Margin of intermediation | [10 marks] |
Section B
Answer ONE (01) question only
Question 1
(a) Critically discuss direct finance and justify how does intermediation process
overcome these problems. (20 marks)
- Critically explain concentration ratio (CR) as a measure of bank competition and discuss how the Herfindahl-Hirschman index (HHI) is a corrective measure.
(20 marks)
(c) Explain (i) Eurodollar (ii) Euro certificate of deposits (iii) Euro commercial
papers and (iv) Eurobonds. (10 marks)
(d) Discuss systemic regulation and prudential regulation in banking with their
policy actions. (10 marks)
Question 2
(a) The following information is available for East West Bank:
Mortgage loan | £250,000Loan fee | 2.0% | |
Capital Requirement | 8% | Cost/Income ratio | 40% |
Interest on Deposit | 2.1% | Loan loss probability | 1% |
Interest on Loan | 5.5% | Tax rate | 25% |
Requirement: Calculate the following: |
|
(i) Interest spread and total interest | (2 marks) |
(ii) Total fee income | (2 marks) |
(iii) Costs | (4 marks) |
(iv) Loan losses | (2 marks) |
(v) Before tax return on equity | (5 marks) |
(vi) After tax return on equity | (5 marks) |
(b) Explain reverse repurchase agreements (REPOs) and show how to calculate
interest on REPOs. (20 marks)
(c) Distinguish between the national and foreign currency views of international
banking. (10 marks)
(d) Outline the problems of the banks when they are exposed to liquidity risks
and present the solutions to these problems. | (10 marks) |