Attempt any two questions from this section

1. What does a flow-of-funds matrix for an economy show? What are the uses and significance of flow-of-funds accounts

2. Explain the Capital Asset Pricing Model. How does the Arbitrage Pricing Theory build upon the Capital Asset Pricing Model

3. Discuss debt and equity as means of raising finance by firms in the capital market. In this context, discuss the Modigliani Miller hypothesis.

4. Discuss Milton Friedman's Modern Quantity Theory of Money and compare it with Keynes's theory of Demand for Money.

Answer any five questions from this section

5. Explain the nature of options as a derivative. How does it help in risk management?

6. What are the main functions of a Merchant Bank

7. What is an expected utility function? What are the important properties that an expected utility function has

8. Explain the nature and significance of money supply using the money multiplier process.

9. What is the role of stock markets in the economy? As assets, how do bonds differ from stocks

10. What do you understand by 'duration' as used in the analysis of fixed income securities? In what way is the so-called 'modified' duration measure a modification of the Macaulay measure

11. Discuss the main achievements and failures of the Bretton Woods Institutions.

12. Examine the case for government regulation of financial markets. Do you think the government should regulate commercial banks? Give reasons for your answer.