01-21-2011, 06:04 PM
Assignment
Question No 01
Part (A)
Calculate the impact of an increase in desired currency holdings on the money multiplier from
10% to 15% of deposits when the reserve requirement is 10 percent of deposits, and banks’
desired excess reserves are 04 % of deposits.
Assumption:
If the general public held currency Rs. 109 millions and deposit are Rs. 99 millions.
Part (B)
What will be difference in deposits by following a Rs. 3 billion Open Market Purchase
assuming a 5% reserve requirement
Assumptions:
1 No excess reserves are held.
2 There are no changes in the amount of currency held by the public
Question No
A commercial bank has following data:
Total assets valued Rs. 1,000,000
Item Assets Liabilities
Interest rate sensitive 35% 45%
Interest rate non‐sensitive 65% 55%
Initial interest rate 08 % 05%
Interest rate increase 3% both in assets and liability
Required:
What will be the increase / decrease in the amount of net‐profit(interest) due to the interest rate
change? Your answer should be in absolute figures.
Question No 01
Part (A)
Calculate the impact of an increase in desired currency holdings on the money multiplier from
10% to 15% of deposits when the reserve requirement is 10 percent of deposits, and banks’
desired excess reserves are 04 % of deposits.
Assumption:
If the general public held currency Rs. 109 millions and deposit are Rs. 99 millions.
Part (B)
What will be difference in deposits by following a Rs. 3 billion Open Market Purchase
assuming a 5% reserve requirement
Assumptions:
1 No excess reserves are held.
2 There are no changes in the amount of currency held by the public
Question No
A commercial bank has following data:
Total assets valued Rs. 1,000,000
Item Assets Liabilities
Interest rate sensitive 35% 45%
Interest rate non‐sensitive 65% 55%
Initial interest rate 08 % 05%
Interest rate increase 3% both in assets and liability
Required:
What will be the increase / decrease in the amount of net‐profit(interest) due to the interest rate
change? Your answer should be in absolute figures.