What is?

Prudential control:

A is concerned with the financial health of the banking system as a whole and its impact on

the wider economy.

B is a requirement that each bank maintains sufficient liquidity.

C is measured in terms of the ratio of a bank's share capital and reserves to its risk-weighted

assets.

D does not apply to global systemically important banks.

To improve the cash position of banks, the central bank could do any of the following EXCEPT:

A buy government bonds from banks with an agreement to sell them back later.

B issue more government bonds and fewer Treasury bills.

C buy Treasury bills from the banks before maturity.

D rediscount Treasury bills.

Which of the following will lead to a decrease in the demand for money?

A an increase in actual prices

B increased expectations of price rises

C a reduction in the use of credit cards

D a switch from weekly to monthly payment of wages

The central bank is concerned about rising domestic inflation. Which of the following monetary

measures would NOT be suitable as a means to try and reduce inflation?

A introducing minimum reserve ratios for banks

B reducing its lending to banks

C buying government bonds from banks

D funding the PSNCR with more government bonds and fewer Treasury bills

X2.26 The policy remit of the European Central Bank is to:

A achieve a target inflation rate of below, but close to, 2% pa over the medium term.

B target an inflation rate of close to 2% pa, whilst taking account of the volatility of output.

C target low inflation, together with sustainable growth, low unemployment and moderate

long-term interest rates.

D target an inflation rate of exactly 2% pa.

(i) By considering a term assurance policy as a series of one-year deferred term assurance policies, show that: A [5] Xin Xin (ii) Calculate the expected present value and variance of the present value of a term assurance of 1 payable immediately on death for a life aged 40 exact, if death occurs within 30 years. Basis: 4% per annum interest, AM92 mortality, no expenses. [6] [Total 1 1] Note: where required, px can be calculated for integers t and x using the formula Px = Uxet/lx, where the l, functions can be found on pages 74 and 75 of the Tables