Question

Discuss three roles of the Government in Financial Markets. In your discussion
provide specific examples this role within the Ghanaian context with appropriate
references where necessary.
2. Discuss three functions of financial Institutions and explain how financial institutions
can promote economic growth in Ghana.
3. State and briefly describe three major types of insurance.
4. State two differences and similarities between Savings and Loans companies and
Credit unions in Ghana.
5. Discuss three functions of the money market.
6. Describe three of functions of mutual funds.
7. Discuss three roles of capital markets in an economy. In your discussion, explain the
key differences between debt and equity.
8. There are a number of financial instruments used in financial markets. Mention and
explain 5 of them with key distinctions regarding the issuer, the maturity, risk, cost
etc.
9. Download any interest rate from the Bank of Ghana website for at least five (5) years
and plot it graphically. What can you can about the term structure?
10. Briefly describe different scenarios in which any three derivatives may be used and
how they will be used.

Answer 1

1. three roles of government in financial markets are as follows-

A. The government is required to maintain the money flow into the economy, through the central bank and it is authorised to assist The Central Bank in-form of the monetary policy according to the need of the economy and a government is always trying to formulate policies with the central banks which will suit the current status of economy like, it will adopt the quantitative easing approach while designing a monetary policy when the economy is facing a crisis, and it will try to use a quantitative tightening kind of monetary policy when the economy is going through and inflation and there is huge money supply into the system.

B. Government is also required to formulate the tax structure in to the economy and it is authorised for collection of taxes, from the corporates so the government always try to formulate such tax policy which are suitable to the current status of the economy like it will reduce the corporate tax structure if the economy is going through a severe crisis, and it will try to increase the tax when the economy is on the boom.

C. Government is also required to provide liquidity to the overall financial market, and it helps in bailing out various financial distress company in order to save the whole economy, and stop the spreading of contagion so it will always try to help various organisation survive and sustain through financial distress and it will help the overall economy in order to thrive through the situation to exploit the the financial prosperity.

In the context of Ghanian economy, it is a developing market and government has a key role to play in development of the overall financial system, so government will always try to help the the businesses in growth so that the economy could enlarge and expand through various economic cycles.