Compute the effective annual rate

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Reference no: EM132210945

Questions -

Q1. Explain the concepts of tier i and tier ii capital used by the Central Bank in assessing the financial position of commercial banks. Bank A has K200 million in its risk weighted assets (RWA), and K5 billion as Tier 1 capital. Its Tier 2 capital amounts to K15 million. What is the Bank's capital adequacy position?

Q2. Explain how an increase in the currency to deposits ratio affects the money multiplier. The Bank of Zambia recently announced an increase in the statutory reserve ratio from 5% to 8%. Explain how this impacts on the money creation process.

Q3. Suppose Bank ABC has the quoted an annual interest rate of 6%, what is the effective annual rate when interest is compounded semiannually? Compute the effective annual rate when interest is compounded continuously.

Q4. The Government recently announced an increase in wages for civil servants. Using the IS-LM analysis, explain how this affects output, inflation, interest rates and the exchange rate.

Reference no: EM132210945

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