Assignment GGG

Group Assignment (25%)
Direction: Choose the best answer from the given alternatives. (10 marks)
1. There are five principal events, which may conveniently be taken as
dividing Ethiopian banking history into periods: Which one of the
following is the third event?
A. The establishment of the State Bank of Ethiopia
B. Establishment of Bank of Abyssinia
C. The revolution of Ethiopia in 1974
D. All of the above,
E. None of the above.
2. _____is an agency of government-which is not concerned with maximizing

its profit
A. Development Bank
B. National Bank
C. Commercial Bank
D. All of the above
3. Which of the following cannot be considered as the main responsibility of

the National Bank of Ethiopia?
A. Maintaining price stability including exchange rate stability,
B. Ensuring fair competitiveness and soundness of the financial system
C. Enhancing the economic progress of the country in pursuit of its
mission.
4. _____means providing liquid funds to those financial institutions squeezed

by severe liquidity pressures, especially when alternative sources of funds
have dried up.
A. Maintaining and improving the payments mechanism
B. Lender of the last resort
C. Stabilizing financial markets (Regulation and supervision)
5. The central bank can reduce or increase the money supply by affecting the
ability of commercial banks to _____.
Financial Market and Institutions; Final Examination. Instructor- Kassaye Tuji 1
A. Create demand deposits.
B. Enhance the countries development.
C. Increase the amount of loan provided
D. All of the above.
6. Which of the following is not among (not one of) the three broad
approaches to lend or to borrow?
A. Dealing directly with another,
B. Using one or more of many organized markets,
C. Dealing via intermediaries,
7. The main responsibilities of the NBE include the following, but

A. Maintain price and exchange rate stability,
B. Deposit mobilization and loan granting,
C. Enhancing the economic progress of the country,
8. In the absence of effective controls of money supply; there can be:

A. Stabilization of the value of currency,
B. Halt of business activities,
C. Protection of integrity in the international financial markets,
9. Depository institutions are popular financial institutions, because;

A. They repackage funds received from deposits to provide loans of the size &
maturity desired by deficit units.
B. They accept the risk on loans provided.
C. They diversify their loans among numerous deficit units and therefore can
absorb defaulted loans better than individual surplus units could.
10.All of the following are true about commercial banks, but;

A. The major use of funds by commercial banks is making demand deposits
and various types of savings deposits.

B. Commercial banks have the largest and most diverse collection of assets of
all depository institutions.
C. Commercial banks are the largest and most important depository
institutions.

Part II: MATCHING
Direction: Match statements under ‘Column One’ with the correct terms
under ’Column Two’
Column One Column Two
1 Commercial banks do participate in the _____ to A Financial
invest their idle money for short period of time. Intermediaries
2 The first modern bank established in Ethiopia B Regulatory Body
3 Act as banker, fiscal agent and financial advisor C A retail bank
to the government.
4 _____are defined as financial associations which D National Bank
outfit capital by proper circumstances in order to
reasonably invest in development activities.
5 _____are not only store houses of the country’s E Commercial Banks
wealth, but also provide stream of resources
necessary for economic development.
6 If money is defined as a____, then time and F Treasury Bills Market
savings accounts at the commercial banks and
other non-bank financial intermediaries, such as
credit unions would also be considered important
components of the money supply.
7 _____ perform the vital role of bringing together G Store of Value
those economic agents with surplus funds who
want to lend, with those with a shortage of funds
who want to borrow.
8 The activities of _____ by commercial banks can H Bank of Abyssinia
be dealt using two aspects i.e. outstanding
credits/loans available and disbursement of
fresh/new loans.
9 If money is defined exclusively as_____, then the I Granting Loans
sum of all currency and coin held by the public
plus the value of all publicly held checking
accounts and other deposits against which drafts
may be made would constitute the money supply.
10 _____ is often an individual branch of a J Capital Market

commercial bank where one may procure these
services.
K Provision of other
services
L Developing Banks
M Medium of Exchange
N None of the forgoing
Part III: True or False
Direction: Say true or false for the following statements.
1. Changes in money supply are closely linked to changes in economic activity.
2. The marginal cost creating additional units of money is close to zero.
3. Commercial banks are not advised to charge fees and/or interest for many of
their services, since they may pay interest on other services.
4. The ability of commercial banks raise funds is much greater than other financial
institutions.
5. The rapid economic development discourages banks to expand services by
storing the security or securities.

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Group Assignment (25%)

2. _____is an agency of government-which is not concerned with maximizing

3. Which of the following cannot be considered as the main responsibility of

4. _____means providing liquid funds to those financial institutions squeezed

7. The main responsibilities of the NBE include the following, but

8. In the absence of effective controls of money supply; there can be:

9. Depository institutions are popular financial institutions, because;

10.All of the following are true about commercial banks, but;

Financial Market and Institutions; Final Examination. Instructor- Kassaye Tuji 2

Financial Market and Institutions; Final Examination. Instructor- Kassaye Tuji 3

Financial Market and Institutions; Final Examination. Instructor- Kassaye Tuji 4

Financial Market and Institutions; Final Examination. Instructor- Kassaye Tuji 5

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