MECE 004 FINANCIAL
INSTITUTIONS AND MARKETS
December 2019 Question
Paper
Time : 3
hours Maximum Marks :
Note :
Attempt questions from each section as p instructions given.
SECTION A
(Long-Answer
Questions) Answer any two questions from this section.
1. Analyse
the Fisherian hypothesis regarding interest rates and inflation. In this
regard, examine the Quantity Theory of Money.
2. Discuss
the relative merits of fixed and flexible exchange rates. Explain the concept
of currency convertibility.
3. What are
derivatives ? Explain the concept of `Options'. What distinguishes an American
option from a European option ?
4. Explain
the Black-Scholes formula for pricing a financial instrument.
SECTION B
(Medium-Length
Answer Questions)
Answer
any five questions from this section.
5. Discuss
the role of stock markets in an economy.
6. What is
meant by Public Offering ? What are its costs ?
7. Explain
the Linear Probability Models of estimating the risk of default.
8. Discuss
the major instruments of monetary policy in India.
9. Explain
the Arbitrage Pricing Theory.
10. What are
the functions of a Central Bank ? Explain how it controls the creation of
credit by the Commercial Banks.
11. Describe
the flow-of-funds accounts of a country and discuss their significance.
12. Discuss
the main achievements and failures of the Bretton Woods Institutions.
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