DIPLOMA IN TREASURY & RISK MANAGEMENT

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INSTITUTE OF BANKERS OF SRI LANKA
Incorporated by an Act of Parliament No. 26 of 1979
DIPLOMA IN TREASURY & RISK MANAGEMENT
ASSIGNMENT – September, 2020
You are required to submit your answers to this assignment to the Program
Office on or before 25th October 2020.
There are two parts of the assignment and you need to answer both parts. Please
provide your answers for each part separately.
PART A
1. Discuss the risks, arising from each of the following transactions
individually and in aggregate to a bank.
2. Discuss how to use derivatives products to hedge the risks you mentioned
above and any other risk mitigation procedures that you may adopt.
3. Discuss the regulatory requirements that you may have to comply while
carrying out these transactions.
Transactions:
1. Sold USDLKR 2 million to a corporate importer
2. Bought USDLKR 1 million from Bank A
3. Bought 1 week forward USDLKR 0.5 million from Bank B
4. Borrow LKR 1 billion from Bank C for a period of 1 week
5. Buy a 5 year Sri Lankan Government bond with a face value of LKR 1
billion.
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Part B
1. Elaborate on the main functions of a Treasury within a bank, focusing on
areas that are key to a successful operation of the institution
(Maximum 500 words)
2. Elaborate on the role and importance of a ALM desk/ function in the bank,
stressing on its primary responsibilities, deliverables and contribution to
ALCO
(Maximum 500 words)

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