Helping the world grow since 2012
Call/WhatsApp/Text +1(838)201-9170

  • HOME
  • STUDY RESOURCES
  • ABOUT
    • About Apax Researchers
    • Why Do Students Use Us
    • Why Choose Us
    • Contact Us
  • BECOME A WRITER
  • BLOG
    Login
    Sign Up
    Helping the world grow since 2012
    Call/WhatsApp/Text +1(838)201-9170

    • HOME
    • STUDY RESOURCES
    • ABOUT
      • About Apax Researchers
      • Why Do Students Use Us
      • Why Choose Us
      • Contact Us
    • BECOME A WRITER
    • BLOG
    Login
    Sign Up
    Helping the world grow since 2012
    Call/WhatsApp/Text +1(838)201-9170

    • Write My Essay: Perfect Cheap Essay Writing Service for You
    • ABOUT
      • About Apax Researchers
      • Why Do Students Use Us
      • Why Choose Us
      • Contact Us
    • BECOME A WRITER
    • BLOG
    • QUESTIONS AND ANSWERS
    • LOGIN
    • SIGN UP

    A diversified financial conglomerate has four units (subsidiaries), with each unit focussing on its own specialisation: • Insurance operations • Pension fund operations • Mutual fund operations • Commercial bank operations As a financial analyst for the conglomerate’s holding company in the U.K., you have been asked to assess all of the units and to indicate how each unit will be affected as economic conditions change. You are a “Central Bank watcher” who constantly monitors any actions taken by the Central Bank to revise monetary policy. The Central Bank is scheduled to meet in one week to assess economic conditions and set monetary policy.

    TASK 1 (1,800 words) 60 marks
    A diversified financial conglomerate has four units (subsidiaries), with each unit focussing on
    its own specialisation:
    • Insurance operations
    • Pension fund operations
    • Mutual fund operations
    • Commercial bank operations
    As a financial analyst for the conglomerate’s holding company in the U.K., you have been
    asked to assess all of the units and to indicate how each unit will be affected as economic
    conditions change. You are a “Central Bank watcher” who constantly monitors any actions
    taken by the Central Bank to revise monetary policy. The Central Bank is scheduled to meet
    in one week to assess economic conditions and set monetary policy.
    The last time the Monetary Policy Committee met, it decided to raise interest rates. At that
    time economic growth was very strong, and inflation was relatively high. Since the last
    meeting, economic growth has weakened, and the unemployment rate will likely rise by one
    percentage point over the quarter.
    Some economists are concerned about the possibility of a recession. Yet some industries are
    experiencing high growth, and inflation is higher this year than in the previous five years.
    Although you will consider the economists’ opinions, you plan to make your own assessment
    of the Central Bank’s future policy.
    Answer these questions:
    1. Given the circumstances, is the Central Bank likely to adjust its monetary policy? If so,
    what would you expect? (10 marks)
    2. Recently, the Central Bank has allowed the money supply to expand beyond its longterm target range. Does this affect your expectation of what the Central Bank will
    decide at its upcoming meeting?
    (10 marks)
    2
    3. Suppose the Central Bank has just learned that the Treasury will need to borrow a
    larger amount of funds than originally expected. Explain how this information may
    affect the degree to which the Central Bank changes its monetary policy.
    (10 marks)
    4. You believe that if the Central Bank does not revise its monetary policy, the economy
    will continue to decline. If the Central Bank stimulates the economy at this point, you
    believe that stocks would outperform bonds. Based on this information do you think
    the company should switch their bond holdings to stocks? Consider the typicalsources
    and uses of funds at each unit of the company. Explain how your recommendation will
    affect each unit’s performance.
    (20 marks)
    5. What is your forecast of how recent, existing or potential regulations will affect each
    unit’s performance?
    (10 marks)

    TASK 2 (1,200 words) 40 marks
    Answer only one of the following:
    Q1. INSURANCE COMPANIES
    a. Select a publicly traded insurance company of your choice. Go to its website and
    retrieve its most recent annual report or use any relevant information to answer the
    following questions:
    i) Summarise the company’s main business and its performance over the past five
    years. How does the insurance company allocate its funds? (That is, what is its
    asset composition)?
    (10 marks)
    ii) Explain why its performance was higher or lower than the norm. What reasons
    are given for the particular level of performance?
    (10 marks)
    b. Statistically, teenage drivers are more likely to have an automobile accident than
    adult drivers. As a result, insurance companies charge higher insurance premiums
    for teenage drivers. Suppose one insurance company decided to charge teenagers
    and adults the same premium based on the average risk of an accident for all drivers.
    3
    Using your knowledge of the problems associated with asymmetric information,
    discuss whether you think this insurance company will be profitable.
    (10 marks)
    c. How might the insurance industry be affected by climate change and other forms of
    environmental damage? What risks and opportunities are there for the insurance
    industry?
    (10 marks)
    Q2. PENSION FUNDS
    a. As a consultant to a state’s underfunded pension fund, you have been asked to
    search for solutions to prevent underfunding in the future.
    i) One explanation for the underfunding of the defined-benefit plan is that the
    economy was weak recently, and financial markets were weak, and this was the
    cause of the underfunding. If so, the underfunding may not be a problem in the
    future. Do you think this explanation is sufficient, such that there is no need to
    search for an alternative solution? Explain.
    (10 marks)
    ii) Some state workers prefer to be on a defined-benefit plan because they will
    likely make poor investments if they are forced to manage their own funds (as
    they would with a defined-contribution plan). Is that a sufficient reason to force
    a state to remain on a defined-benefit plan?
    (10 marks)
    iii) Suppose some state workers have a defined-contribution pension plan. As they
    go through their working life, in what order would you recommend them to have
    the following portfolio allocations: (a) 100 percent bonds and money-market
    instruments, (b) 100 percent stocks, (c) 50 percent bonds and 50 percent stocks?
    Provide some rationale to support your recommendation.
    (10 marks)
    b. Green finance is a growing phenomenon, in particular with the recent introduction
    of the UN Sustainable Development Goals. What might be the tensions between
    making green and sustainable funds greener and making those funds more accessible
    or attractive to large asset owners like pension funds?
    (10 marks)
    4
    Q3. MUTUAL FUNDS
    a. The mutual fund industry publishes a fact book containing exhaustive data on the
    historic and current state of mutual funds. Assess the Investment Company Institute’s
    website www.ici.org:
    i) What have been the trends in the assets invested in worldwide mutual funds in
    the past 10 years?
    (10 marks)
    ii) What are the factors that led to the increase in index funds as a share of the fund
    market in the past 10 years?
    (10 marks)
    b. Consider the prevailing conditions that could affect the demand for stocks, including
    inflation, the economy, the monetary policy, political conditions, and the general
    mood of investors. Based on the current conditions, recommend a specific type of
    stock mutual fund that you think would perform well. Offer some explanation to
    support your recommendation.
    (10 marks)
    c. A number of green/sustainable cryptocurrencies are available, including Bitcoin Green
    and Energy Coin. Pick one of these, or find another online. What are the similarities
    and differences as compared to SolarCoin? Which do you believe has the greatest
    potential to support the growth of green finance?
    (10 marks)
    Q4. COMMERCIAL BANKING
    a. Negative Interest Rate Territory
    i) The interest rate paid by the European Central Bank (ECB) on excess reserves
    declined below zero in 2014 (and remained there as of 2022). What was the
    rationale behind this move to a negative deposit rate, and why would banks be
    willing to pay to keep deposits with the ECB?
    (10 marks)
    5
    ii) Suppose immediately after the ECB began charging banks a fee for holding their
    excess reserves, the banks switched to holding cash in their vaults (rather than
    holding excess reserves), and also began charging customers for holding their
    deposits. Do you think the ECB would have kept the deposit rate in negative
    territory? Explain your answer.
    (10 marks)
    b. Implementing a structural separation of commercial banking and investment banking
    activities is a way to reduce systemic risks when a potential bank failure threatens an
    entire economic system. Do you think separating banking service industries from
    other financial service industries is a good idea? Explain your argument.
    (10 marks)
    c. How might commercial banks be negatively affected by climate change? What might
    the opportunities be for green and sustainable banking?
    (10 marks)
    Q5. CENTRAL BANK
    a. What are the advantages and disadvantages of quantitative easing as an alternative
    to conventional monetary policy when short-term interest rates are at the effective
    lower bound?
    (15 marks)
    b. If “inflation is always and everywhere a monetary phenomenon,” why did the huge
    expansions of central bank money by the Federal Reserve, the ECB, and the Bank of
    Japan between 2007 and 2018 not result in high inflation in those economies?
    (15 marks)
    c. Following the coronavirus pandemic in March of 2020, the Federal Reserve announced
    that it reduced the reserve requirement to zero as the size of the Fed’s balance sheet
    approached $6 trillion. What might be the rationale for implementing such a change?
    (10 marks)

     

     

    BEAM033 Final Assignment 2022

    CITATION

    Share
    GET A FREE QUOTE






      

    Why Choose US

    Affordability & Discounts
    Dedicated Support Team
    Timely Delivery
    Money Back Guarantee
    Zero Plagiarism
    Great discounts
    Top Writers
    Adherence to Instructions

    Recent Posts

    • Common App Essay Prompts
    • Transition Words: Examples and When and How To Use Them
    • Research Paper Topics
    • Best Argumentative Essay Topics
    • How to Write a Cover Letter

    If you need writing solution... We are available for you

    Place your order now and one of our writers will begin working on your assignment right away.

    Order NOW!

    From Our Blog
    • 0
      Common App Essay Prompts
      August 9, 2022
    • 0
      Research Paper Topics
      August 8, 2022
    Services
    • Research
    • Writing
    • Summary & Editing
    • Programming & Tech
    • Graphics & Design
    • Transcription
    • Digital Marketing
    • Lifestyle

    Social Media

    Subscribe here to get interesting stuff and updates!

    whatsapp Image
    Let's chat

    Copyright © 2020 Apax Researchers - All Rights Reserved.

    Legality

    Terms of Use