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Eco349  Money, Banking, and Financial Markets

Winter 2023

Assignment

Total 50 marks

Due April 7 , 11pm, 2023

1.   Find a recent ( January 2023-April 2023) Money, Banking, and Financial Markets related article in the media (the Economist, Globe and Mail, National Post, New York Times,      etc.), and attempt to explain parts or all of it using the tools we learned in class.              Highlight the sentences that you analyze, and hand in the article along with your work.  Use written and graphical explanations. (approximately 3 double spaced pages; 20         marks)

2.  Outline the adverse selection and moral hazard problems that existed in the Euro crisis of

2009. (approx. 2 double spaced pages; 10 marks)

3a .Why is it important for a bank to determine the amount of interest sensitive assets and

interest sensitive liabilities relative to fixed interest rate assets and fixed interest rate liabilities?

(5marks)

b. How does a bank manage its interest sensitive and insensitive assets and liabilities in order to reduce risk? (5 marks) (approx. 2 double spaced page)

4. Explain the relationship between return on assets and return on equity. What incentives does this relationship give a bank manager? Is this the desired outcome preferred by regulators? Discuss. (approx. 2 double spaced page; 10 marks)