The Description of Monetary Policy

The Description of Monetary Policy

The description areas are following

1. Definition of monetary policy;
2. Objectives of monetary policy;
3. The instrument of monetary policy of the Central Bank;
4. Classification of monetary policy;
5. The necessity of monetary policy;
6. Monetary policy vs. credit policy;
7. Difference between monetary policy and credit policy.

Monetary Policy

The monetary policy defines managing the money of a country by controlling the supply of money and also the credit amount that is called monetary policy. Generally, the central bank of every country formulates the goals of monetary policy and applies it in various sectors. In the description of monetary policy, monetary policy is very essential for a stable economy.

Objectives of Monetary policy

The goals and objectives of monetary policy depend on the condition of the economy of this country. Because the situation of the economy of this country is related to the goals or objects of monetary policy. Here given some important goals or objects of monetary policy:-

1. The stability of value:
2. The stability of the exchange rate:
3. Neutral monetary policy:
4. Control business cycle:
5. Increase Employment
6. Improve investment:
7. Economic development:
8. Full Employment:

The instrument of Monetary Policy of the Central Bank

In the description of monetary policy, the main and foremost goals or objects of the instruments of monetary policy of the central bank are full employment and economic stability. This is the main target of the monetary policy of the central bank. The central bank uses some important instruments of monetary policy. Here given below:-

1. Controlling the issuance of money:
2. Bank rate:
3. The ratio of minimum reserve:
4. Open market operation:
5. Controlling the supply of credit:
6. Ethical pressure:
7. Direct supervision:

Classification of Monetary Policy

In the description of monetary policy, there are three types of monetary policy.

The monetary policy of expansionary or availability: Which monetary policy issues or creates the increase or availability of the money supply is called the monetary policy of expansionary or availability. In the description of monetary policy, the monetary policy of expansionary or availability creates the supply of loans easily. The central bank reduces bank rate and reserve ratio and also purchases debenture or operates the open market policy to increase the supply of money. Generally, the central bank executes this policy for reducing the huge number of unemployment problems or depression.

The monetary policy of contraction or rigid: Which monetary policy reduces the supply of money in the market is called the monetary policy of contraction or rigid. The monetary policy of contraction or rigid is the opposite of the monetary policy of expansionary or availability. The central bank increases the bank rate and the reserve ratio and also sells debenture or operates the open market policy to reduce the supply of money. Generally, central bank executes this policy for reducing the extremely large rate of inflation.

Neutral/Indifference Monetary Policy: Neutral/Indifference monetary policy is that policy where there is no economic change in production, national income, and employment is called neutral/indifference monetary policy. Neutral/Indifference monetary policy executes in the stable economic policy. but not in progress economic policy.

The necessity of Monetary Policy

1. The stability of value
2. Lessening of income discrimination
3. Increase saving and investment
4. Optimum production
5. Optimum money supply
6. Remove bad poverty cycle
7. Reduce business cycle
8. Acquisition of full employment
9. Rapid Development

Read more article of  Definition of Different Kinds of Money

Difference between monetary policy and credit policy. 

Are monetary policy and credit policy the same?

Monetary policy vs. credit policy

Answer: In a general sense, there is no difference between monetary policy and credit policy. But in practically monetary and credit policies are not the same. In the description of monetary policy, There are differences in definition, area, and activities. The following is given the explanation:-

1. Definition: Monetary policy means principles to reduce or increase money by the central bank. On the other hand, the principles of the central bank are taken to reduce or increase the power of giving a loan to the commercial bank.

2. Activities: Monetary policy is a large activity of the central bank. In the contrary, Credit policy is a narrow activity.

3. Concept: Monetary policy is a full concept of the economy of a country but credit policy is a part of monetary policy.

4. Importance: Monetary policy is very important in the economy or we can’t think economy without monetary policy. Credit policy is essential not more than monetary policy.

Difference between monetary policy and credit policy.

Monetary policy vs. credit policy differences are shown in the table

Monetary Policy	Credit Policy
The monetary policy defines managing the money of a country by controlling the supply of money and also the credit amount that is called monetary policy.	The principles of the central bank are taken to reduce or increase the power of giving a loan to the commercial bank.
Monetary policy is a large activity of the central bank	A credit policy is a narrow activity.
Monetary policy is a full concept of the economy of a country	Credit policy is a part of monetary policy.
Monetary policy is very important in the economy or we can’t think economy without monetary policy.	Credit policy is essential not more than monetary policy.
Monetary policy is used to control the money supply.	Credit policy is not used to the supply of money.

                                                                                                                                                                 

Monetary policy and credit policy are not the same but they are interrelated to each other in the economy of a country.

 Read More 17 Essential Good Qualities of an Interviewee   

16 Financial Terms For Preparation on Interview Board

16 Financial Terms For Preparation on Interview Board

These are given below:-

1.Finance
2.Capital Budgeting
3.Capital Structure
4.Capital Rationing
5.Cost of Capital:
6. Pay Back period
7.Average Rate of Return
8.Net Present Value(NPV)
9.Internal Rate Of Return
10.Profitable Index
11.The capital asset pricing model (CAPM)
12.Risk
13.Return
14.Uncertainty
15Business Risk
16.Financial Risk 

Explanation of Financial Terms For Preparation on Interview Board

1. Finance:'Finance' has been originated from the Latin word"Finis".Finance is the combination of different activities like raising of funds, investments of funds, and management of funds to accomplish the objects of an individual or of a firm. Finance is called the lifeblood of an organization.
2.Capital Budgeting: Capital budgeting is the functions related to the long term investment decisions of a firm.
3.Capital Structure: Capital Structure is the composition of long-term liabilities, specific short-term liabilities like banknotes, common equity, and preferred equity which make up the funds with which a business firm finances its operations and its growth.
4.Capital Rationing: Capital rationing is a process of allocation of funds to viable projects to ensure the maximum utility of funds.
5.Cost of Capital: Cost of capital means the minimum required rate of return of a firm.
6. Pay Back period: Payback period is a capital budgeting technique that measures the number of years required for the CFAT to pay back the original outlay required in an investment proposal.
7. Average Rate of Return: The average rate of return(ARR), method of evaluating proposed capital expenditure, is also known as the accounting rate of return method.
Or
The average rate of return is measured to divide the average income after tax by the average investment.
8.Net Present Value(NPV): Net present value constitutes the difference between the present value of its cash inflows discounted by the firm's cost of capital and the initial investment of the firm.
9.Internal Rate Of Return

10. Profitable Index: Profitable Index, another technique of capital budgeting, is the ratio of the present value of future cash inflows at the required rate of return, to the initial outlay.
11. The capital asset pricing model (CAPM): The capital asset pricing model is a model that provides a framework to determine the required rate of return on an asset and indicates the relation between return and risk of the asset.
12. Risk: Risk can be called as the disagreement in the actual returns originating from an investment over its working life, in relation to the measured return as forecast at the time of the initial capital budgeting decision.
13.Return: Return is the expectation or the achievement from an investment over a period of time.
14.Uncertainty: Uncertainty, unavoidable, and unmeasurable, is called when the unknown accident occurs.
15 Business Risk: Business risk means the possibility to reduce future profit in business.
16. Financial Risk:  Financial risk, avoidable, and measurable, is the possibility of failing to pay interest and principal in the future for using debt.

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#16 Financial Terms For Preparation on Interview Board

General Knowledge Part 1

https://121viva.blogspot.com/

1. Which is situated to the east of Bangladesh- Tripura.
2. Which organizations has head office located at Dhaka- CIRDAP / BIMSTEC.
3. Which film is made on the partition of 1947- Chitra Nadir Pare.
4. Which film is made on the partition of 1971- Ndir Naam Madhumati.
5. Who was the captain of the first test match of Bangladesh- Naymur Rahman.
6. Which is the biggest religious and social festival of the chakmas- Bijhu
7. What is the name of the biggest NGO in the world- BRAC
8. Which Bangladeshi player’s name has been included in the Guinness book of record- Rani Hamid.(not sure).
9. What is the local name of Saint Martin Island- Narikel Jin Jira.
10. The only folklore Museum of Bangladesh is located at:- Sonargoan.
11. Who made Hossaini Building ( Imam Ban)- Mir Murad.
12. Where is Birmingham Palace situated- London.
13. What is the name of Israel’s intelligence agency- Mossad/ Aman.
14. The recent Nepal earthquake in April 2015 is also known as the- Gorkha.
15. When was “Missionaries of Charity” established by Mother Teressa- 1950.
16. Which one is the last number state of the United Nations- South Sudan.
17. Who is the painter of the famous painting ‘ The Persistence of Memory’- Salvador Dali.
18. Who become the first cricketers to score four successive one-day international centuries during the World Cup 2015- Kumar Sangakkara.
19. Who is known as ‘The father of Green Revolution’- Norman Borlaug.
20. In which university does the physicist of Bangladesh Dr. M Zahid Hasan work- Princeton.
21. How many were accused in the Agartala conspiracy case including Bangabandhu- 35.
22. What is the name of Malaysian currency- Ringgit.
23. How much is the percentage of technocrat minister allowed in the cabinet of Bangladesh government- 10 percent.
24. What kind of organization of Bangladesh government is DAE- Agriculture.
25. The Masai Mara National Reserve in Kenya is contiguous with what famous national park of Tanzania- The Serengeti.
26. First medicine park of Bangladesh is being established in- Gajaria.
27. The last film of Humayun Ahmed was- Ghetuputra Kamala.
28. Which institution first published the complete map of Bangladesh sea boundary- Institute of marine Sciences and Fisheries.
29. Ramon Magsaysay Award is given from- Philippines.
30. Who is the designer of the National Flag of Bangladesh- Quamrul Hasan.
31. Who scored the first ever perfect ‘10’ in gymnastics- Nadia Comaneci.
32. The 15th Amendment of the Bangladesh Constitution abolished- Caretaker Government System.
33. The Cactus Curtain separates Guantanamo naval Base from-Cuba.
34. What is the tenure of the Governor of Bangladesh Bank- 4 year.
35. Which international weekly recognized Bangabandhu Sheikh Mujibur Rahman as ‘poet of polities’- The Newsweek.
36. Bangladesh shares land boundary with- India and Myanmar.
37. Which one is the longest river of Bangladesh- Meghna.
38. In the Indian sub-continent the first woman graduate with honors was- Kamini Roy.
39. Avro key-board was made by- Mehdi Hasan Khan.
40. ‘Mohasen’ is related to- Cyclone.
41. The British prime minister is- Theresa Mary May.
42. Which sports star is the highest medal winner in Olympics- Michael Phelps.
43. What is the world’s smallest landlocked country- Vatican City.
44. Julian Assange is best known for starting which controversial website in 2006- Wikileaks.
45. What is the official press agency of the government of China- Xinhua.
46. France’s high speed rail service is known by what three-letter name- TGV.
47. Red Barn, now a historic site in the US, was the original manufacturing site of which company- Boeing.
48. How many brigades were formed in the liberation war of Bangladesh- 3.
49. Which of the following sweeteners does not provide any energy to the body- Saccharin.
50. Which of the following is the currency of Argentina- Peso.
If any information is wrong, please correct that.

Important Financial Term For Interview

Stock 
A stock is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
Weighted Average Cost Of Capital - WACC
Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted .
Money Market
The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term,with maturities that usually range from overnight to just under a year. Among the most common money market instruments are eurodollar deposits, negotiable certificates of deposit (CDs), bankers acceptances , Treasury bills , commercial paper, municipal notes , federal funds and repurchase agreements (repos).
Capital Markets
Capital markets are markets for buying and selling equity and debt instruments. Capital markets channel savings and investment between suppliers of capital such as retail investors and institutional investors , and users of capital like businesses, government and individuals. Capital markets are vital to the functioning of an economy, since capital is a critical component for generating economic output. Capital markets include primary markets , where new stock and bond issues are sold to investors, and secondary markets , which trade existing securities.
Common Stock
Common stock is a security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are on the bottom of the priority ladder for ownership structure; in the event of liquidation , common shareholders have rights to a company's assets only after bondholders, preferred shareholders and other debtholders are paid in full.
Preffered  Stock
The parts of corporate securities are called as preference shares. It is the shares, whichhave preferential right to get dividend and get back the initial investment at the time of winding up of the company.
Deferred Shares
 Deferred shares also called as founder shares because these shares were normally issued to founders. The shareholders have a preferential right to get dividend before the preference shares and equity shares.These shares were issued to the founder at small denomination to control over the management by the virtue of their voting rights.
No Per Shares
When the shares are having no face value, it is said to be no par shares. The value of shares can be measured by dividing the real net worth of the company with the total number of shares.
Debentures
A Debenture is a document issued by the company. It is a certificate issued by the company under its seal acknowledging a debt.debenture includes debenture stock, bonds and any other securities of a company whether constituting a charge of the assets of the company or not.
Capital
The term capital refers to the total investment of the company in terms of money, and assets.
It is also called as total wealth of the company. When the company is going to invest large
amount of finance into the business, it is called as capital

Financial Term

Liquidity Ratio
It is also called as short-term ratio. This ratio helps to understand the liquidity in a business
which is the potential ability to meet current obligations. This ratio expresses the relationship
between current assets and current assets of the business concern during a particular period.
The following are the major liquidity ratio:
Current ratio = Current assets / Current liabilities
Quick ratio = (Current assets – Inventories) / Current liabilities
solvency
= (Cash and equivalents + Marketable securities + Accounts receivable) / Current liabilities

Activity Ratio
It is also called as turnover ratio. This ratio measures the efficiency of the current assets and
liabilities in the business concern during a particular period. This ratio is helpful to
understand the performance of the business concern. Some of the activity ratios are given
below:
Accounts Receivable Turnover=Total Credit Sales/Accounts Receivable
Average Collection Period=365 Days/Accounts Receivable Turnover
Inventory Turnover=Total Annual Sales or Cost of Goods Sold/Inventory Cost
Days in Inventory=365 Days/Inventory Turnover
Solvency Ratio
It is also called as leverage ratio, which measures the long-term obligation of the business
concern. This ratio helps to understand, how the long-term funds are used in the business
concern. Some of the solvency ratios are given below:
Debt to equity = Total debt/ Total equity
Debt to assets = Total debt / Total assets
Interest coverage ratio = Operating income (or EBIT) / Interest expense
Profitability Ratio
Profitability ratio helps to measure the profitability position of the business concern.
Gross Margin = Gross Profit/Net Sales * 100
Operating Margin = Operating Profit / Net Sales * 100
Return on Assets = Net Income / Assets * 100
Return on Equity = Net Income / Shareholder Investment * 100

Important Financial Terms For Viva Preparation

Finance Finance describes the management, creation and study of money, banking, credit,investments, assets and liabilities that make up financial systems, as well as the study of those financial instruments

Private Finance includes the Individual, Firms, Business or Corporate Financial activities to meet the requirements.

Wealth maximization is known as value maximization or net present worth maximization.

Profit maximization is called as cashing per share maximization. It leads to maximize the business operation for profit maximization

Financial statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of financial aspects of a business firm. It may show a position at a moment of time as in the case of a balance-sheet or may reveal a service of activities over a given period of time, as in the case of an income statement.

Income StatementIncome statement is also called as profit and loss account, which reflects the operational position of the firm during a particular period. Normally it consists of one accounting year. It determines the entire operational performance of the concern like total revenue generated and expenses incurred for earning that revenue

Position StatementPosition statement is also called as balance sheet, which reflects the financial position of thefirm at the end of the financial year.Position statement helps to ascertain and understand the total assets, liabilities and capitalof the firm.

Statement of Changes in Owner’s EquityIt is also called as statement of retained earnings. This statement provides information about the changes or position of owner’s equity in the company.

Statement of Changes in Financial PositionIncome statement and position statement shows only about the position of the finance, hence it can’t measure the actual position of the financial statement. Statement of changes in financial position helps to understand the changes in financial position from one period to another period.

Public Finance concerns with revenue and disbursement of Government’s Financial matters.