RIFT VALLEY UNIVERSITY ASSELA CAMPUS

DEPARTMENT OF ACCOUNTING AND FINANCE

ASSIGNMENT

BY
ASRES TEREFE

SUBMITTED TO:: ---------------------------------------------

AUGUST, 2023
ASELLA
 Write the Correct Answer for the following Question

1. What we mean by financial market and financial system?

Financial Markets:- include any place or system that provides buyers and sellers the means to
trade financial instruments, including bonds, equities, the various international currencies, and
derivatives. It facilitate the interaction b/n those who need capital with those who have capital to
invest. While,
Financial system:- is a set of institutions and practices that facilitate and allow for the
exchange of funds between borrowers, lenders and investors.
2. What does commodity mean?:- It is a basic good used in commerce that is interchangeable
with other goods of the same type.
3. Explain the classification of money:- It can be broadly classified as: Full-bodied
Money. Representative Full-bodied Money. Credit Money. On the other hand Economists
differentiate among three different types of money: commodity money, fiat money, and bank
money.
4. Explain the functions of commercial banks:- It provide financial services to the general
public and also provide loan facilities to the business which helps in ensuring economic stability
and growth of the economy. Therefore, we can say that credit creation is the most important
purpose of commercial banks.

5. Write the functions of a commercial bank?:- Commercial banks perform various functions
that are as follows: Accepting deposits, Granting loans and advances, Agency functions,
Discounting bills of exchange, Credit creation.
6. Explain how transaction takes place
The theory of financial intermediation argued that through lender-borrower relationships, the
lenders generate valuable information about borrowers that could not be available in financial
markets.
7. List and define kinds of banks other than National Bank of Ethiopia or NBE?
 One state owned Development Bank of Ethiopia,
 A government owned Commercial Bank Ethiopia
 Many private owned banks like Oromia Bank, Oromia cooperative bank, Awash bank,
Sinke Bank, Zemen Bank Dashen Bank and the likes.
8. What are the objectives of Ethiopian Commodity Exchange?:- It ensures all commodity
market players the security they need in the market through providing a secure and reliable end-
to –end system for handling, grading and storing commodities, matching offers and bid for
commodity transaction and risk free payment and good delivery system,

9. Mention the member of Ethiopian Commodity Exchange:- ECX members are those core
actors of the exchange. A member seat is a permanent and transferrable right to trade on the
exchange. Members can be any individuals, company public enterprise or corporate that can
meet the membership requirement.

10. Briefly discuss the function of market:- are sometimes called the 4Ps (product, Price,
promotion and place)
11. Mention some of money market participants:- the most common participants are
commercial bank, government sponsored enterprises, government itself, corporate, future market
exchanges, brokers and dealers and national reserve.
12. Forex traders (foreign exchange traders) anticipate changes in currency prices and take
trading positions in currency pairs on the foreign exchange market to profit from a change in
currency demand. They can execute trades for financial institutions, on behalf of clients, or as
individual investors.
Foreign exchange dealer
A firm or individual that buys foreign exchange from one party and then sells it to another party.
The dealer makes the difference between the buying and selling prices, or the spread.

13. A financial intermediary is an institution or individual that serves as a middleman among

diverse parties in order to facilitate financial transactions. Common types include commercial
banks, investment banks, stockbrokers, pooled investment funds, and stock exchanges.
14. What are the levels of intermediaries?:- There are four main types of intermediary: agents,
wholesalers, distributors, and retailers. A firm may have as many intermediaries in its
distribution channel as it chooses.
15. What are the duties is NBE?:- To manage and administer the country's international
reserves. To license & supervise banks & hold commercial banks reserves & lend money to
them. To supervise loans of commercial banks and regulate interest rates.
16. List some types of banks other than NBE:- NBE is a central bank where as the
government owned banks are Development Bank of Ethiopia and Commercial Bank Ethiopia as
well as there are many private owned banks like Oromia Bank, Oromia cooperative bank, Awash
bank, Sinke Bank, Zemen Bank Dashen Bank and the likes
17. Explain the functions of commercial bank of Ethiopia?:-:- The significant role of CBE
are both the engine of the country's economic growth and mobilizing savings for further
investment. It offers the following
 Interest Free Banking Services:
 Deposit and Investment;
 Financing;
 Guarantee Trade Service;
 Money Transfer (Hawallah); and Foreign currency exchange.