Description
MEC 110: MONEY, FINANCIAL INSTITUTIONS AND MARKETS
Tutor Marked Assignments
Course Code: MEC- 110
Assignment Code: Asst /TMA /2024-25
Total Marks: 100
Section-A
Answer the following questions in about 700 words each. Each question carries 20
marks.
2X20=40
1. a. What are the different kinds of risk associated with financial transactions?
b) How do financial and economic factors interact during a crisis? What policy options can
be used to fight a recession? Explain with the help of financial crisis of 2008
2. a) What do you mean by exchange rate? What are two systems of determining exchange
rate?
b) Discuss some of latest issues of foreign exchange stability. What suggestions would
you give to maintain foreign exchange stability?
Section B
Answer the following questions in about 400 words each. Each question carries 12marks.
5X12=60
.
3. a.) What are the main functions performed by capital markets in the economy?
b) Discuss the Modigliani-Miller theorem.
4. a.) What is Capital Asset Pricing Model? How is it related with the Efficient Market
Hypothesis?
b.) How can we apply Efficient Market Hypothesis in real life? Give examples
5. a.) Suppose that a corporation issues a bond having face value ₹ 1,000 redeemable at
premium of 10% at the end of 3 years. If the discount rate is 12% and coupon rate is 8%,
then calculate the value of this bond. Moreover, would you buy this bond if the market
price of the bond is ₹ 1,050 or ₹ 800?
b) Calculate the yield to maturity from the following information. Coupon rate = 7%, face
value = ₹ 500, price of bond = ₹ 350, maturity period = 10 years.
6. a) What are the key principles underlying the monetary policy transmission mechanism?
b) How do commercial banks and non-banking financial institutions contribute to the transmission of
monetary policy in the economy?
7. Write short notes on following:
a) Yield to call
b) Instruments of Monetary policy
c) nominal and real interest rate
d) Efficient Portfolio Frontier
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