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المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية اإللكترونية
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 1
FIN402 (1st Term 2023-2024)
Deadline: 7/10/2023 @ 23:59
Course Name: Financial Institutions and
Student’s Name:
Markets
Course Code: FIN402
Student’s ID Number:
Semester: I
CRN:
Academic Year: 2023-24 1st Term
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
/ 10
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
•
•
This assignment is an individual assignment.
Due date for Assignment 1 is October 7th, 2023.
•
The Assignment must be submitted only in WORD format via allocated folder.
•
Assignments submitted through email will not be accepted.
•
Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
•
Students must mention question number clearly in their answer.
•
Late submission will NOT be accepted.
•
Avoid plagiarism, the work should be in your own words, copying from students
or other resources without proper referencing will result in ZERO marks. No
exceptions.
•
All answered must be typed using Times New Roman (size 12, double-spaced)
font. No pictures containing text will be accepted and will be considered
plagiarism).
Submissions without this cover page will NOT be accepted.
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية اإللكترونية
College of Administrative and Financial Sciences
Assignment Purposes/Learning Outcomes:
1. Examine the role of the financial system in the economy and the rationale for
financial intermediation.
2. Demonstrate an awareness of the variety of financial instruments.
Assignment questions: Total grade – 10 points
1. All over the world, the financial system is among the most heavily regulated
sectors. By giving reasons, explain in detail why such regulations are needed for
this sector. (2 points)
2. What is the distinction between the nominal interest rate and the real interest rate?
Which is a better indicator of incentives to borrow and lend? What is the real
interest rate if the nominal interest rate is 8% and the expected inflation rate is
10% over the course of a year? (2 points)
3. Suppose an economy is passing through the expansionary phase of the business
cycle. Using supply demand model of bonds, graphically examine.
• Impact on shift of demand and supply curves of the bonds
• Impact on price of bonds and expected interest rates.
• Based on your finding advice an investor, in such an economic condition,
whether to invest in long-term bonds or short-term bonds and why? (4 points)
(Note: In case finding difficulty in drawing online graph, students can draw graph manually and
can use scan copy.)
4. What are the factors an average investor must consider when facing a choice of
whether to buy and hold an asset or whether to buy one asset rather than another.
Also explain how changes in these factors influence quantity demanded of an
asset. (2 points)
Answers:
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية اإللكترونية
College of Administrative and Financial Sciences
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