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explain the functions performed by financial intermediaries and how they can promote economic
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- Why do we call a bank a financial intermediary?Which of the following is not a function of financial intermediaries? A Deal with asymmetric information problems B. Reduce the exposure of investors to risk C. Promote adverse selection after transactions. D. Lower transaction costsExplain the functions of financialintermediaries?
- Why are financial intermediaries the most heavily regulated businesses in the economy? Explain why stock market is an important factor in business investment decisions? What is inflation? What explains inflation? If there is a recession, will it be more difficult to find a job when you graduate? Explain. What are the six types of regulations the government employs in an attempt to ensure the soundness of our financial intermediaries? Explain. Explain the difference between debt and equity markets. primary and secondary markets, exchange and over the counter markets and money and capital markets. What is the difference between foreign bond and a Eurobond? Which institutions are subject to Federal Deposit Insurance corporation (FDIC) regulations, and what is the nature of the regulations? What are the reasons for high transaction costs to exist in a barter economy? What separates the assets included in M1 from the assets included in M2? Does it matter what definition of money policy…What has happened to the profitability of financial firms in the US economy in recent decades? Why have they been able to increase their profits? Is this a good thing for the US economy as a whole?Why are financial intermediaries willing to engagein information collection activities when investors infinancial instruments may be unwilling to do so?
- Question 1 Briefly explain how the adverse selection problem can affect the financial markets. Explain how financial intermediaries can help to solve the adverse selection problem in stock and bond investmentsWhat are the transaction costs problems facing financialorganizations? Explain how financial intermediaries canhelp reduce these problems.Why is it so important to an economy to have fully developed financial markets?
- Which of the following best defines a financial intermediary? a collection of stocks and bonds issued to investors an asset sold by a company which entitles the buyer to partial ownership a claim by a buyer to a future payment by a seller a financial institution that transforms investor funds into financial assets“In a world without information costs and transactioncosts, financial intermediaries would not exist.” Is thisstatement true, false, or uncertain? Explain your answer.Analysis of how the actions of financial intermediaries can result in an economic crisis e.g., the securitisation of mortgages and development of subprime mortgages (market) and the role of intermediaries in recovery
