1.The demand for foreign currency bank deposit by the people of Bahrain is influenced by the interest rate it offers and the expected changes in currencies exchange rate value. Critically analyze the factors of rate of return and real rate of return that determine the demand of assets?

2. Exchange rates are determined in the foreign exchange market. The major participants in that market are commercial banks, international corporations, nonbank financial institutions, and national central banks. Critically apply the reasons for parties agree to exchange currencies on some future date at a pre-negotiated exchange rate, in contrast to spot trades that are settled immediately.