Question 1 (5 Points): A1, C1,

Across countries, why prices of stocks have fallen sharply? Explain how economic and financial uncertainty influence investors decisions about investment in the stock market.

Question 2 (5 Points): A1, A2

" The sharp decline in interest rates, combined with growing anxiety about the economic outlook, have also raised investor concerns about the health of banks." Can you explain how interest rates affect the health of the banking system? You may also explain how the corona crisis influences interest rates. Now given the crisis can we forecast future rates of interest?

Question 3 (5 Points): C1, C2

What does "Large swings in asset prices can quickly put markets and institutions under pressure" mean? In view of the corona pandemic and the effort of central banks to respond to the challenges of the crisis how do you explain: "hoping for the best, preparing for the worst"? Use monetary policy and interest rates to explain your answer.

Question 4 (5 Points): D1, D4

In view of the above article how the Central Bank of Bahrain responded to the challenges

of coronavirus? You may explain with details some of the measures taken by the Central Bank of Bahrain to maintain financial and economic stability. Nowyou may comment on the following statement. " The sharp tightening in financial conditions, along with expectations of low inflation, means that monetary policy has a role to play at the current juncture."

Question 5 (5 Points): A1, C1

"Authorities should also be alert to possible financial stability threats from outside the banking system." Explain.