Reference no: EM132735215 , Length: 2000 Words
GAC5013 Money Banking and Risk - Gulf College
Learning outcome 1: Demonstrate an understanding the different types of risks and causes of risk management within organisation (including financial institutions)
Learning outcome 2: Understand the economic necessity of credit and business risk
Learning outcome 3: Understand the theoretical underpinnings of risk - its causes, and methods of managing the primary business risks arising from financial markets
Assessment Task
Muscat: The total outstanding credit extended by other depository corporations stood at OMR25.8 billion at the end of November 2019, a rise of 3.0 per cent over the level witnessed a year ago, according to the report issued by the Central Bank of Oman (CBO).
Credit to the private sector increased by 2.6 per cent to OMR22.8 billion at the end of November 2019.
Of the total credit to the private sector, the non-financial corporate sector stood at 46.1 per cent followed by the household sector (mainly under personal loans) at 45.2 per cent, financial corporations at 5.4 per cent and other sectors the remaining 3.4 per cent.
Total deposits registered a growth of 1.7 per cent to OMR23.2 billion at the end of November 2019. Private sector deposits of the banking system registered a growth of 2.3 per cent to OMR14.8 billion at the end of November 2019.
Sector-wise, the share of households was 50.5 per cent of the total private sector deposit base, followed by non-financial corporations at 29.5 per cent, financial corporations at 17.7 per cent and the other sectors at 2.3 per cent.
Read the above report and write an assignment based on the following tasks:
(A) Briefly introduce characteristics of financial corporations and non-financial corporations.
(B) Discuss risk management in financial market and financial institutions with three types of risks faced by financial market and three types of risks faced by financial institutions in Oman.
(C) According to above report, the total deposits registered a growth of 1.7 per cent to OMR23.2 billion at the end of November 2019. Private sector deposits of the banking system registered a growth of 2.3 per cent to OMR14.8 billion at the end of November 2019. If the CBO has set the cash reserve ratio for 10% of total deposit, how much credits (loans) can be given to the borrowers?
You are required to:
a) Discuss credit risks in private sectors of the banking system.
b) Calculate total balance can be given in the form of credits or loans.
c) Discuss credit risk management in private sectors of the banking system mentioned in the report.
(D) An Omani company is selling merchandise on open account to an Indian buyer for 500,000 Indian rupees, payment to be made in 60 days. The current exchange rate is 0.014 US$ per Indian rupee. The Omani company is expecting to exchange the 0.385 Omani Rial per US$. You are required to:
a) Discuss currency risk in non-financial institutions and financial institutions.
b) Calculate transaction exposure when the payment is received in OMR.
c) Calculate if the US$ weakens to 0.012 $ per Indian rupee, how much will the Omani company receive the payment?
d) Advise which currency that the Omani company should invoice Indian company and explain the foreign exchange risk.
(E) Provide a conclusion with the logical flow of information given in the assignment report.
Attachment:- Money Banking and Risk.rar