Mod - 2 - BA Eligibility under the old liquid asset requirements
94 views
Skip to first unread message
Jin Yoong
Dec 1, 2008, 9:08:18 AM12/1/08
to PKMC
These 2 questions appeared in the M2 Sept 96 paper. However it
pertains to the old liquidity requirements which specify the need for
the bank to maintain certain liquid assets.
This should not appear in the current exam as we now use the NLF (New
Liquidity Framework) which has the concept of liquifiable assets
instead. However I include it in this forum in case anyone wonders
what the question is all about. Also because someone asked me this
question, which was debated quite a lot when I was studying it 4
months back.
*************************************************************************************************
Question 26 to 29 are based on the following facts:
BA face value : RM500, 000
Maturity date : 29 December 1995
Discount rate : 6.75%
26. If you had purchased the BA on 15 September 1995, and the acceptor
of the BA is not your own bank, will the BA qualify for liquid assets
status?
A. No
B. Yes
C. No, unless it was accepted by your own bank
D. Yes, if the BA had two other endorsements by approved financial
institutions.
Answer should be No, unless it was accepted by your own bank. See page
18 on Mod 2 notes from Philip's class. Not the slides but the text
notes.
It states "In addition to being negotiable, BAs (others) of not more
than 3 calendar months to maturity qualify as liquid assets ......"
*************************************************************************************************
37. Bank Jaya decides to purchase a BA with a face value of RM1
million to meet its mandatory liquidity requirement. The dealer
decides to purchase the longest dated BA with the best possible yield
to satisfy this requirement. He will
A. Purchase a 150 day BA at 6.70% discount
B. Purchase a 91 day BA at 6.60% discount
C. Purchase a 100 day BA at 6.65% discount
D. Purchase a 90 day BA at 6.50% discount
E. Purchase a 200 day BA at 6.90% discount
Answer is D because of the 3 calendar month limit. However, when I was
discussing with my classmates back in Aug, we weren't sure whether 3
calendar month could be 90 or 91 days.
*************************************************************************************************
pertains to the old liquidity requirements which specify the need for
the bank to maintain certain liquid assets.
This should not appear in the current exam as we now use the NLF (New
Liquidity Framework) which has the concept of liquifiable assets
instead. However I include it in this forum in case anyone wonders
what the question is all about. Also because someone asked me this
question, which was debated quite a lot when I was studying it 4
months back.
*************************************************************************************************
Question 26 to 29 are based on the following facts:
BA face value : RM500, 000
Maturity date : 29 December 1995
Discount rate : 6.75%
26. If you had purchased the BA on 15 September 1995, and the acceptor
of the BA is not your own bank, will the BA qualify for liquid assets
status?
A. No
B. Yes
C. No, unless it was accepted by your own bank
D. Yes, if the BA had two other endorsements by approved financial
institutions.
Answer should be No, unless it was accepted by your own bank. See page
18 on Mod 2 notes from Philip's class. Not the slides but the text
notes.
It states "In addition to being negotiable, BAs (others) of not more
than 3 calendar months to maturity qualify as liquid assets ......"
*************************************************************************************************
37. Bank Jaya decides to purchase a BA with a face value of RM1
million to meet its mandatory liquidity requirement. The dealer
decides to purchase the longest dated BA with the best possible yield
to satisfy this requirement. He will
A. Purchase a 150 day BA at 6.70% discount
B. Purchase a 91 day BA at 6.60% discount
C. Purchase a 100 day BA at 6.65% discount
D. Purchase a 90 day BA at 6.50% discount
E. Purchase a 200 day BA at 6.90% discount
Answer is D because of the 3 calendar month limit. However, when I was
discussing with my classmates back in Aug, we weren't sure whether 3
calendar month could be 90 or 91 days.
*************************************************************************************************
Reply all
Reply to author
Forward
0 new messages