Financial institutions and investment

management

Assignment 01

Course Instructor: Kirubel (Ass.Prof)

Requirements

➢ Legible and neat (Page format) will be rewarded.

➢ The title of your paper with its content for each option is given below.
➢ Strictly follow the instruction given below.
➢ The paper should have a maximum of 15 pages.
➢ The paper will be marked out of 25%.
➢ Doing this assignment negligently will reduce your point.

Instruction: prepare a detailed chapter summary on one of the following topics.

Each student is expected to select one option and prepare a detailed chapter
summary on the option you have selected.

Option 1: Risk management in financial institution

- Concepts
- Managing Credit Risk
- Managing Interest-Rate Risk
- Income Gap Analysis
- Duration Gap Analysis
- Some Problems with Income Gap and Duration Gap Analyses

Option 2: Depository institution

- Banks
- Banks and creation of money
- Constraints on bank lending
- Savings and Loan Associations (S&Ls)
- Mutual Savings Banks
- Credit Unions
 Option 3: Non-depository institution
- Insurance
- Pension fund
- Unit trust
- Investment trust
- Mutual fund
- Finance companies
- Investment ban

Option 4: Efficient market theory

⮚ Concepts
⮚ Efficient market hypothesis
⮚ Empirical analysis
⮚ Random walk model
⮚ Random walk model comparison with other theories

Option 5: Exchange rate risk, derivatives markets and speculation

- Forms of exposure to exchange rate risk
- Exchange rate risk management techniques
- Derivatives markets
o Financial futures
o Options
o Exotic options
o Other related products
- Comparing different types of derivatives
o Exchange-traded versus OTC products
o Forward versus futures contracts
o Forward and futures contracts versus options
- The use and abuse of
derivatives
Option 6: Investor and interest
rates
- What is interest?
- Different kinds of interest rate
- Approaches to interest rate
- Yield curve
- Liquidity premium hypothesis
- Market segmentation hypothesis
- Unbiased expectation theory
- Expected interest rates and term structure of interest rates
- Eclectic theory and investors

Option 7: Asset allocation decision

- Individual investor life cycle
- Portfolio management process
- Need for a policy statement
- Input to the policy statement
- Importance of asset allocation
-
- Submissions should be made on your LMS only.
- File name should contain your name and your ID No.
- For any Questions about the assignment, you can use this link and
forward me your questions via message.