Question 1: (50 marks)

1. Define Globalization and explain its economic dimensions

[7 marks]

2. Stars co. reveals USD 5000thd as Assets value for December 2019 and allocate 10% of assets' value as standard deviation of its monthly profit.

Required:Calculate PaR (consider Z =1.23 for the present confidence interval)

[8 marks]

3. UNICREDIT Bank accepted deposited savings of $50mln to be invested in equity shares. HALAL Productive firm used this capital to buy machinery and raw materials, and to expand their production capacity. The recipients of the $50mln, as a result of sales of their goods and services, are assumed to save 10% of their income to be deposited at UNICREDIT counters and the cycle continues.

Required:

1. Calculate
   1. the saving multiplier
   2. explain its relationship to the average saving ratio
   3. explain the relationship between saving ratio and the accumulated savings.
2. Quantify the effect of the saving multiplier on the initial saving deposit of $100mln.

[15+10 = 25 marks]

4. HSBC Islamic bank provided murabahah financing to SADCA Co. worth of $1000thd for real estate purpose (plot acquisition) SADCA Co. faces 2 scenarios: the first with no pledge collateral and the second with pledged collateral worth $500thd.

Required:Calculate the risk weight of the plot (asset) for both scenarios (without and with pledge collateral)?

[10 marks]