Financial Markets and Institutions

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Financial Markets and Institutions Mid-Semester Exam Revision The Flow of Fund- the financial system allows the flow of funds from surplus spending units (SSU’s) to deficit spending units (DSU’s). Providers of funds (SSU) receive a financial instrument (which stipulates the terms of the deal – i.e. amount lent, stream of future income, maturity date, etc.) issued either by the receiver of the funds (DSU) or by a financial intermediary. Direct Finance- SSU’s lend money to DSU’s and SSU’s hold a financial claim directly issued by the DSU’s. In direct financing, this exchange takes place directly between SSU’s and DSU’s (likely with the help of a third party like an underwriter and broker) BUT in the ABSENCE of a financial intermediary.…show more content…
| Trends of the Australian Financial System: * Small and decreasing part for financial companies, managed funds and general insurers for more than 10 years * Securitisation vehicles changed trend with an increase before the crisis and a decrease after * Return on equity in 2006 2007 were around 20% dropped to 10% during the crisis and now back
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