Overview
Part A: (10 marks)
Impact of Monetary Policy on Stock Market Performance for Saudi Arabia
Objective: To analyze the influence of monetary policy, particularly interest rates on stock market performance.
Collected data:
a. Monthly TASI index data from January 2020 through March, 2025
b. Monthly short-term interest rate
Review at least 3-5 articles on the linkage between monetary policy and stock market performance.
1. Find the expected return and Standard Deviation on TASI Index and compare with Dow Jone Industrial Average for the same period
2. Find the correlation between return on TASI index and interest rate.
3. discuss and write up the conclusion
Part B: (15 marks)
a. How the Federal Reserve promote economy by increasing Money Supply?
Review at least 3 articles that discuss about how Saudi central bank and a foreign central bank increase economic growth using expansionary monetary policy.
b. Describe the importance of Yield curves in predicting economic Activities.
Using the following term to maturity and yield to maturity, develop yield curve and explain the shapes of the yield curve for 20/3/2025 and 31/3/2025 respectively.