- Explain the business model of the bank assigned to your choose.
- Analyse the profitability, total assets, liabilities, off balance sheet items as well as the book value and market value of capital of the bank over the past five years.
- Explain at least five risks to which the bank is exposed. Using published figures give some indication of the ‘size’ (or dimension) of these risks.
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- What is the bank’s duration gap?
- Use your answer in (a) to calculate the expected absolute change in the value of (i) the bank’s assets, (ii) its liabilities and (iii) the equity of the bank for a predicted decrease of 0.75% in interest rates.
- Give four distinct reasons why the realised change in equity value may be different from your answer in (b) when the Reserve Bank took action to lower the target cash rate by 0.75%.
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