Discuss the current account as part of balance of payment .

7 Outline the process used by futures exchanges to remove the credit risk of individual participants. [2] Table I below shows part of the operation of a margin account for a short position in two gold futures contracts. The initial margin is US$2,000 per contract and each contract is for delivery of 100 ounces of gold. The closing futures prices are in USS per ounce of gold. Copy the table into your answer book and fill in the entries in the blank columns. Table 1 Operation of the margin account for two gold futures contracts. Date Closing Daily Gain Cumulative Margin Futures (Loss) Gain (Loss) Account Price Balance US USS USS USS Futures price at which contract is entered into on: May 3rd 400 May 3rd 396-5 May 4th 399 4 May 5th 400.4 May 6th 399 7 May 7th 405.9 May 8th 397.9 [6] (ili) Describe briefly two major differences between the trading of currency futures contracts on an exchange and the trading of forward currency contracts in the Over-the-Counter (OTC) market. [2] [Total 10] Write down a formula for the after tax return for an investment whose dividend is d and capital gain is g- [1] State any assumptions that you have made in this formula. (iii) Describe what other factors an individual will need to take into account in practice to determine his after tax return. [3]A city in a developing country is contemplating bidding to host the Olympic Games in 2016. History shows that the costs involved in hosting such events have been much greater than expected. Your merchant bank has been asked to advise the committee overseeing the bid. (i) Outline the procedure you would adopt in establishing the feasibility of the bid by the city. | (ii) List the risk factors you would include in your risk matrix. (iii) Describe briefly the ways in which the bid could be financed and the factors that need to be taken into account. List the ways in which costs can arise when an investment regulatory system is developed