ECS2605
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UNIVERSITY EXAMINATIONS
May/June 2020
ECS2605
The South African Financial System
100 Marks Duration 2 Hours
Examiners:
First: Mrs S Kennedy-Palmer
Second: Dr JC Vermeulen
This paper consists of 19 pages and three (3) sections: A, B and C. Note that all three questions are compulsory. There are no elective questions. The formulas for ECS2605 appear on page 19.
Instructions:
(1) After completion of the exam paper, submit your answers in one PDF document by using the Assessment Info tool on myUnisa. Detailed instructions were provided in Tutorial Letter
ECS2605/102/1/2020
(2) If you experience technical problems, and are not able to submit your answers using the Assessment Info tool on myUnisa you can use the following alternative submission link: https://tinyurl.com/yauj5v8p . If you are still unable to submit, email the module lecturer at kennes@unisa.ac.za.
(3) If you experience any technical problems during the completion of this exam, contact bugmaster@unisa.ac.za.
(4) Submit your answers as a single document in PDF format. It is preferable that you print the first 10 pages of this exam and fill in your answers for sections A, B and C. However, if this is not possible, you may also type your answers for sections A, B and C. It is the student’s responsibility to ensure that the answers to all sections are in the single PDF document, any missing answers will receive zero.
(5) You have ticked the honesty declaration before accessing this paper. The completion of this paper must be your own work.
(6) While you are not required to cite your sources, this does not mean that you can simply copy information from any source. You need to answer the questions in your own words.Plagiarism will not be tolerated and may result in disciplinary action if detected.Please report any information on cheating and dishonesty to the Ethics Hotline (0800 005 311)
(7) Please ensure that your PDF document is NOT encrypted to a “secured” mode and that it is NOT password protected as these files cannot be marked. Virus infected files will also not be marked.
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CONFIDENTIAL
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ECS2605
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SECTION A – COMPULSORY ESSAY QUESTIONS
Answer ALL of the following questions in the space provided. Section A counts 20 marks in total.
(a) What is a credit rating? (2)
(b) Why does South Africa’s recent sovereign credit rating downgrade imply higher funding costs for the government? (2)
(c) Explain the differences in objectives between the lender-of-last-resort function of the SARB and its accommodation policy. (4)
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CONFIDENTIAL
Page 3 of 19
ECS2605
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(d) Describe exchange-rate risk and explain how a currency swap can be used to hedge against exchange-rate risk. (3)
(e) Describe the role of the Basel Committee on Banking Supervision (BCBS). (2)
(f) Explain how the retirement benefit is calculated under both a defined benefit and a defined contribution retirement fund. (2)
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