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Brief Answer Questions: Attempt ALL questions.
[10 × 2 = 20]What is financial intermediation? Give some example of financial intermediaries in Nepal.
What do you mean by capital market?
Write the meaning of ancillary financial services.
State the major roles of risk management industry.
Write the meaning of credit rating agencies.
What do you mean by foreign direct investment?
What is the profit margin of a bank given that its asset utilization ratio is 1.45 and return on asset is 14.5%?
A T-bill with face value Rs. 10,000 and 180 days to maturity is selling at Rs. 9,700, what will be annual yield on T-bill?
Gap ratio of Bank A and Bank B are 25 and 30 percent respectively. Which bank is more interest rate sensitive?
The Mega Fund, a closed-end fund, has a portfolio of assets worth Rs. 220 million. It has liabilities of Rs. 10 million. It also has 20 million shares outstanding. What is the fund's NAV? If the fund trades at 2 percent discount from its NAV, what is the market price of the fund's shares?
Descriptive Answer Questions: Attempt FIVE questions.
[5 × 10 = 50]What do you mean by a security dealer? How does securities dealer differ from securities broker?
Explain the need for regulation of depository financial institution by NRB.
Himal Cement Company plans to raise an additional Rs. 50 million through rights offerings. Current market price per share of the bank is Rs. 220. Stockholders are offered a new share at a price of Rs. 100 each for two shares held.
a. Calculate the theoretical value of a rights.
b. Calculate ex-right price.
c. What are the advantages of rights offering?
Assume that it is now January 1, 2022. The rate of inflation is expected to be 5 percent throughout 2022. Investors expect the inflation rate to be 6 percent in 2023, 7 percent in 2024, and 8 percent in 2025. The real risk-free rate currently is 3 percent. Assume that no maturity risk premium is required on bonds with 5 years or less to maturity. The current interest rate on 5-year T-bonds is 10 percent.
a. What is the average expected inflation rate over the next 4 years?
b. What should be the prevailing interest rate on 4-year T-bonds?
c. What is the implied expected inflation rate in 2026, or year 5, given that bonds, which mature in that year, yield 10 percent?
Consider the following summary of BOP for the fiscal year 2021/022 published by Nepal Rastra Bank. (Rs. in million)
| Particulars | Credit | Debit |
| Goods | 352,154 | 1,369,317 |
| Services | 108,111 | 350,229 |
| Primary income | 62,395 | 17,548 |
| Secondary income | 829,238 | 9,735 |
a. What is the net of goods and services account during the fiscal year 2021/022?
b. What is the net of primary income account and secondary income account during the fiscal year?
c. What is the trade deficit/surplus during the fiscal year?
Write short notes on (Any TWO):
a. Citizen Investment Trust (CIT)
b. Insurance board
c. Pension fund
Analytical Answer Questions: Attempt any TWO questions.
[2 × 15 = 30]Explain the concept of financial system. What are the major components of Nepalese financial system? Discuss.
Following is the market information for the securities of three companies:
| Year | Alpha | Beta | Delta | Alpha | Beta | Delta |
| 2020 | 120 | 200 | 160 | 1,000 | 3,000 | 2,000 |
| 2021 | 130 | 190 | 180 | 1,000 | 3,000 | 2,000 |
| 2022 | 70 | 210 | 190 | 2,000 | 3,000 | 2,000 |
No new listing has been incorporated in the stock market since base period. But there has been 2 for 1 stock split in Alpha stock at the beginning of 2022.
a. Determine value weighted index for as used by NEPSE for the year 2021 and 2022. Assume base value of index is 100.
b. Why do you think the value weighted index like NEPSE index is not affected by stock split?
c. What are the uses of market index?
The following are the information extracted from financial statements of City Bank and Metro Bank for the fiscal year 2078/79 (in Million Rs)
| City Bank | Metro Bank | |
| Total assets | Rs. 29,000 | Rs. 38,000 |
| Non-interest income | 350 | 650 |
| Interest income | 4,000 | 4,500 |
| Interest expenses | 2,100 | 2,900 |
| Loans, advances and bill purchased | 21,000 | 27,000 |
| Investments | 5,000 | 8,000 |
| Interest bearing deposits | 24,000 | 26,000 |
| Debenture and bond | 500 | 600 |
a. Calculate non-interest income ratio of both banks for the fiscal year 2078/79
b. Calculate net interest margin ratio of both banks for the fiscal year 2078/79
c. Calculate spread ratio of both banks for the fiscal year 2078/79
d. How do you evaluate both bank's performance on the basis of calculated ratios?