Question 1:
a) What do you understand by the term credit derivatives and asset-backed securities?
b) Supposing perfect capital mobility under Mundell-Fleming Model, using the IS-LM framework clearly describe the effectiveness of:
i) An expansionary fiscal policy under a fixed exchange rate regime.
ii) An expansionary monetary policy under a floating exchange rate regime.
Question 2:
a) Make a distinction between Speculation, Arbitrage and Hedging.
b) In brief explain the differentiations between forwards and futures.
Question 3:
a) Comment on the effects of Globalisation, Technologial, Liberalisation advances and financial innovation on international Finance.
b) Clearly describe the differentiations between transaction and translation risks.