Short Notes (Viva)

Bank Rate: Interest rate at which a central bank will advance short term loans to commercial banks. Zero coupon bonds: A zero-coupon bond (also discount bond or deep discount bond) is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity. Opportunity cost: The cost of an alternative that must be forgone in order to pursue a certain action. Pillars of Basel: Pillar 1 Minimum Capital Requirements, Pillar 2 Supervisory Review Process, Pillar 3 Market Discipline. BOT vs. BOP: BOT difference between export and import of goods and services. Balance of payment is flow of cash between domestic country and all other foreign countries. It includes not only import and export of goods and services but also includes financial capital transfer. BOT in BD: Bangladesh recorded a trade deficit of 643.50 USD Million in August of 2013. IPO: The first sale of stock by a private company to the public. Philip curve: The Phillips curve represents the relationship between the rate of inflation and the unemployment rate. CRR and SLR: Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with the central bank. Statutory liquidity ratio refers amount that the commercial banks require to maintain in the form of gold or govt. approved securities before providing credit to the customers. CRR 6% and SLR 19%. Client vs. Customer: a customer is someone who buys goods or services from a store or business. Client is someone who receives professional services. NPV: The difference between the present value of cash inflows and the present value of cash outflows. Duration: Duration is a value-weighted measure of the maturity of a security or other income generating asset that takes into consideration the amount and timing of all cash flows expected from the assets. Convexity: Bond convexity is a measure of the sensitivity of the duration of a bond to changes in interest rates. Bond vs. debenture: A bond is typically a loan that is secured by a specific physical asset. A debenture is secured only by the issuers promise to pay the interest and loan principal. Finance: Finance is the combination of several activities such as collection of fund from different sources, managing the fund and make proper use of fund by investing or conducting other types of activity to earn profit. Stockholders Vs. stakeholders: A stockholder or shareholder is the holder or owner of stock in a corporation. A stakeholder is anyone that has an interest or is affected by a corporation. UNIDO vs. LM approach: UNIDO measures shadow price in terms of domestic price, while LM measures shadow price in terms of international price. Turnkey Vs non turnkey contract: In turnkey, the entire responsibility for the execution of a project as per plans is entrusted to a single contractor. In Non-turnkey, the project is divided into suitable work packages and entrusted to different contractor. Jamal Hossain Shuvo Page 1

Short Notes (Viva)

Fiscal vs. monetary policy: Fiscal policy is the use of government expenditure and revenue collection to influence the economy. Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest. Standard deviation Vs Variance: The Standard Deviation is a measure of how spreads out numbers are. Variance is the square of standard deviation. Budget 2013-14: 43th, total 222891 crore, GDP 7.2%, Inflation target 7%, Total foreign reserve 1800 crore Dollars. Monetary policy instrument: Open market operation, reserve requirements and bank discount rate. Asset Management: Asset management refers to a banking strategy where management has control over the allocation of bank assets but believes the banks sources of funds (principally deposits) are outside its control. Liability Management: Liability management is a strategy of control over bank liabilities by varying interest rates offered on borrowed funds. Fund Management: Funds management combines both asset and liability management approaches into a balanced liquidity management strategy. FTP: Fund Transfer Pricing. It is a mechanism by which the resources are allocated efficiently across the whole organization. Hedging: A risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. Operational risk: Probability of loss occurring from the internal inadequacies of a firm or a breakdown in its controls, operations, or procedures. Availability risk: The risk that firm will unable to raise fund from available sources when needed. Hot money liability: Deposits and other borrowed funds that are very interest sensitive or that management is sure will be withdrawn during the current period. Duration Gap: The difference between the duration of assets and liabilities held by a financial entity. Deposit composition ratio: Demand deposit/ time deposit. Where demand deposit are subject to immediate withdrawal via check writing, while time deposit have fixed maturities with penalties for early withdrawals. It measures how stable a funding base each bank possesses. Rate expectation approach: Change the mix of investment maturities as the interest rate changes. Asset (Stored) liquidity management: storing liquidity in the form of holding of liquid assets predominantly in cash and marketable security. When liquidity is needed, selected asset are sold for cash until all the banks demand for cash are met. Fund Management strategy: Funds management combines both asset and liability management approaches into a balanced liquidity management strategy.

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Short Notes (Viva)

Gold exchange standard: A phase of gold standard in which all countries can hold reserve as gold, rupees or dollars except UK and USA. Monetary Policy: Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. Lender of last resort: Central bank of a country that has the authority and financial resources to act as the ultimate source of credit for commercial bank when other banks or sources are unwilling to extend loan. Government Banking: Doing banking activity for the government. For example: treasury management, foreign reserve, issuing bond etc. Clearing house: A clearing house is a financial institution that provides service for settling mutual claims and accounts among different financial institutions. Dirty money: money obtained unlawfully or immorally. Basel Pillar 3: (Market discipline): Public disclosure of information on the bank risk profile, capital adequacy and risk management. Liquidity: The ability to meet immediate cash need and short term obligations. Basel 3: Basel III is a set of standards and practices created to ensure that international banks maintain adequate capital to sustain themselves during periods of economic strain. CAMELS Rating: An international bank-rating system where bank supervisory authorities rate institutions according to six factors. Crash time: The time of completion of a project which cannot be reduced further by considering cost issue. Externalities: A consequence of an economic activity that is experienced by unrelated third parties. Gantt chart: A Gantt chart is a visual representation of a project schedule. Decision tree: A graphical representation of different parts of a complex situation and the possible outcomes of different decisions. LM approach: It measures shadow price in terms of international price, measures cost and benefits in terms of uncommitted social income. Project life cycle: The Project Life Cycle refers to a series of activities which are necessary to fulfill project goals or objectives. PERT Network: PERT uses three time estimates to calculate the completing time of a project at the minimum possible time. Delphi technique: This is a group decision by experts in which the individual experts act separately, and their views are pooled together and an attempt is made to arrive at consensus.

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Short Notes (Viva)

Effective rate of Protection: Effective rate of protection attempts to measure the net protection offered to domestic projects. Turnkey contract: A contract in which the entire responsibility of project execution is entrusted to a contractor. Customer experience: Total interaction of a customer with a company or product. Tolerance zone: The range of customer perceptions of a service between desired and minimum acceptable stander. Help desk: A service that provides information and support to customers. Mystery shopping: Research method that is used in order to analyze the quality of consumers experiences. Relationship management: Customer relationship management is a model for managing a companys interactions with current and future customers. Credit risk: Credit risk refers to the risk that a borrower will default on any type of debt by failing to make payments which it is obligated to do. Moral Hazard: The risk that a party to a transaction has not entered into the contract in good faith, has provided misleading information about its assets, liabilities or credit capacity, or has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles. Stress testing: A simulation technique used on asset and liability portfolios to determine their reactions to different financial situations. Loan rescheduling: A practice that involves restructuring the terms of an existing loan in order to extend the repayment period. Spread: The difference between the bid and the ask price of a security or asset. Collateral: Property or other assets that a borrower offers a lender to secure a loan. Prime rate: The interest rate that commercial banks charge their most credit-worthy customers. Doubtful loan: A loan where full repayment is questionable and uncertain. Syndicated loan: A loan offered by a group of lenders (called a syndicate) who work together to provide funds for a single borrower.

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