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A:
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Q: In your opinion, what is the effect of the banking sector clean up on investment decisions of…
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Q: Which of the following statements about transaction costs and financial intermediation is not true?…
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Q: Why have banks been losing income advantages ontheir assets in recent years?
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How do you explain the fact that as the cost of conducting individual investment and lending
transactions fell, the usage of financial intermediaries as middlemen for these transactions actually increased?
Step by step
Solved in 3 steps
- Many businesses finance their investment activities internally. Should internal financing affect the efficiency with which the interest rate performs its functions? No, investment is profitable if the expected rate of return is greater than the rate of interest regardless of the source of funds. Yes, investment is profitable if the expected rate of return is greater than the rate of interest regardless of the source of funds. O No, because internal financing relies on a different profit calculation. Yes, because firms are usually more anxious about what happens to money that they do not have to pay back.In your opinion, what is the effect of the banking sector clean up on investment decisions of individuals/firms.Why have banks been losing income advantages ontheir assets in recent years?
- The asymmetric information problems that act as a barrier to efficient allocation of capital is referred to as financial friction. When financial friction increases, economic activity declines. A financial crisis occurs when information flows in financial markets experience a large disruption, with the result that financial friction increases sharply and the markets stop functioning, economic activity will collapse. Discuss the dynamics of financial crises in advanced economies.What are the disadvantages of the financial intermediaries and the negative ways they can impact the economy?How does a deterioration in balance sheets of financialinstitutions and the simultaneous failures of these institutions cause a decline in economic activity?
- A bank that grants loans to firms in a many different lines of business: will increase its information cost and decrease its credit risk will increase both its information cost and its credit risk will decrease its information cost and decerase its credit risk will decrease its information costs and increase its credit riskWhich of the following statements about transaction costs and financial intermediation is not true? A. Low transaction costs allow banks to offer diversified assets to their customers B. Low transaction costs allow banks to offer liquidity services C. Low transaction costs are due to diseconomies of scale in financial intermediation D. Low transaction costs allow banks to engage in risk sharingThe following are goals‘andobjectives in working-capitalmanagement. Which is the LEASTACCURATE? a. Payables management includes the analysis of the business's use of trade payables and short-term non-trade payables but not long-term non-trade payables.b. Availability of money marketable securities support the cash management function by providing a return on excess cash.c. Receivable management involves setting the credit term but not the implementation of how receivables are collected.d. Inventory management allows the entity to determine the best level of this asset while balancing the risk of over- and under- stocking.
- Does it ever make sense for a profitable company with positive cash flow to seek external financing? Why or why not?ROA and ROE are considered as the performance evaluation tools for banks. Do they always move in the same direction? How does an increase in capital affect them?Contrast the modern construct for FISIM with a measure that sub- tracts deposits from the financial sector’s lending to measure value added in the financial sector, i.e. what we called gross profits. How will these two measures differ in terms of size and sensitivity to risk? Can you give differing views of a world without finance for each to be the proper measure of value added? [Note these are two different statistics which are designed to measure the same number so if they differ at least one of is incorrect.]
