Suppose that you have applied for a post of manager advertised by a foreign bank. From the advertisement, you know that the bank is one of the largest commercial banks in Germany. In order to expand their
business in Asia, the bank has decided to set up an office in Hong Kong. The post holder is responsible for the treasury advisory service in corporate banking. You have been selected to sit for a written test. In the written test, you were asked to write essays on the following two topics. Imagine that you are now taking the test.
A. Differentiate liquidity management and capital management performed by a corporate treasury. Briefly discuss the business opportunities available to a bank treasury arising from these activities.
B. Why do some corporations employ both internal and external techniques in hedging their interest rate risks at the same time? Explain your answer in detail.