SEMESTER FALL 2019
MANAGEMENT OF FINANCIAL INSTITUTIONS (MGT604)
Due Date: 24 January, 2020 Learning Objectives:
The objective of this assignment is to introduce students with the practical procedure of importing goods using letter of credit.
Mr. Haseeb is an importer in Pakistan; he plans to import goods from Mr. Kim, who is a supplier of these goods in Korea. To minimize the risks of international trade Mr. Kim asked the importer to open a letter of credit. Mr. Haseeb is currently dealing with Citibank and advising bank in this case is Shinhan Bank.
Requirement: Being a student of Management of Financial Institutions, you are required to describe the complete procedure (step by step) of importing the goods by using letter of credit.
24 hours extra / grace period after the due date are usually available to overcome uploading difficulties. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.
OTHER IMPORTANT INSTRUCTIONS: DEADLINE:
Make sure to upload the solution file before the due date on VULMS.
Any submission made via email after the due date will not be accepted. FORMATTING GUIDELINES:
Use the font style “Times New Roman” or “Arial” and font size “12”.
It is advised to compose your document in MS-Word format.
You may also compose your assignment in Open Office format.
Use black and blue font colors only.
Use APA style for referencing and citation. For guidance search “APA reference style” in Google and read various website containing information for better understanding or visit http://linguistics.byu.edu/faculty/henrichsenl/apa/AP A01.html
RULES FOR MARKING
Please note that your assignment will not be graded or graded as Zero (0), if:
It is submitted after the due date.
The file you uploaded does not open or is corrupt.
It is in any format other than MS-Word or Open Office; e.g. PowerPoint, PDF etc.
It is cheated or copied from other students, internet, books, journals etc.
Note related to load shedding: Please be proactive
As you know that Post Mid-Term semester activities have been started and load shedding problem is also prevailing in our country now a days. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.
Total Marks 5
Starting Date Friday, November 15, 2019
Closing Date Thursday, November 21, 2019
Question Title Central Banking
Management of Financial Institutions (MGT604)
Graded Discussion Board
Topic: Central Banking and the Conduct of Monetary Policy
Objective: Students will be able to learn and compare monetary policies of different central banks.
Central banks play a crucial role in stabilizing the economy of the country by designing the monetary policy. Monetary policy affects the money supply, interest rates and amount of credit that directly impacts the aggregate output and inflation. By analyzing the conduct of monetary policy of State Bank of Pakistan and of other countries’ central banks we can evaluate the conduct of monetary policy in the past and can guess the future moves.
You are required to go to the website of State Bank of Pakistan at http://www.sbp.org.pk/ and of European Central Bank at http://www.ecb.europa.eu/home/html/index.en.html to determine their strategies regarding monetary policy and then explain briefly how the application of monetary policy of European Central Bank differs from State Bank of Pakistan.
Note:Your solution should be comprised of two parts; 1st determine the strategies for monetary policy of the both central banks and explain the distinct points. Your solution should be in your own words and write concisely. Complete your comments within 300 words.
Important Instructions:Solution must be provided in the recommended format Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course. Obnoxious or ignoble answer should be strictly avoided. Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB is over. Your discussion must remain specified to the context of the case.
MGT604 GDB 1 Solution and Discussion
Pakistan’s central bank has cut the benchmark interest rate by 100 basis points to 8% to help people, businesses and the economy fight against the coronavirus pandemic.
The higher interest rates mean higher borrowing costs, people will eventually start spending less. The demand for goods and services will then drop, which will cause inflation to fall.
These changes can affect both inflation and recessions. Inflation refers to the rise in the price of goods and services over time. It is the result of a strong and healthy economy. However, if inflation is left unchecked, it can lead to a significant loss of purchasing power.
The lower the interest rate, the more willing people are to borrow money to make big purchases, such as houses or cars. When consumers pay less in interest, this gives them more money to spend, which can create a ripple effect of increased spending throughout the economy.
Businesses and farmers also benefit from lower interest rates, as it encourages them to make large equipment purchases due to the low cost of borrowing. This creates a situation where output and productivity increase.
The interest rate is a tool available with SBP to create a balance between the rate of inflation
and economic activities in the country.
The coronavirus pandemic has created unique challenges for monetary policy due to its non-economic origin and the temporary disruption of economic activity required to combat it.
In particular, the successive policy rate cuts and sizeable cheap loans provided through the SBP’s enhirced refinancing facilities have helped maintain credit flows, bolster the cash flow of borrowers, and support asset prices.
Thisl easier monetary policy can provide liquidity support to households and businesses to help them through the ensuing temporary phase of economic disruption.