CHAPTER 1 (ANSWERS).

1: Interest rate have been volatile since last couple of years to control the trade wars and
maintain the liquidity position in the market.

2. The consumer needs to be vigilant of Foreign exchange rates since any devaluation in
home currency will lead to rise in cost of goods and service which in turn will affect the
consumer since their cost of living will increase.

3. dollar is like an benchmark currency any movement in dollar( upside or downside ) will
lead to increase or decrease in trade of US organization with other organization.

4. Monetary policy consists of the process of drafting, announcing and implementing the
plan of actions taken by the central bank, currency board or other competent regulatory
authority of a country that determines the scope and impact of the key drivers of the
economic activity in that country.
5. A financial intermediary is an entity that acts as the middleman between two parties in
a financial transaction, such as a commercial bank, investment banks, mutual funds and
pension funds. Financial intermediaries offer a number of benefits to the average
consumer, including safety, liquidity, and economies of scale involved in commercial
banking, investment banking and asset management.
6. Everyone uses money. We all want it, work for it and think about it. While the creation
and growth of money seems somewhat intangible, money is the way we get the things
we need and desire.

7. Bond is a fixed income product which pays you fixed income but stock is uncertain on
returns and highly risky too.

8. Stock market is an important part of the economy of a country. The stock market plays a
play a pivotal role in the growth of the industry and commerce of the country that eventually
affects the economy of the country to a great extent. That is reason that the government,
industry and even the central banks of the country keep a close watch on the happenings of
the stock market. The stock market is important from both the industry’s point of view as
well as the investor’s point of view.

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