If there is no asymmetric information problem from the perspective of lenders and borrowers, is the role of financial institutions still needed in the financial market? (Hint: should lenders use direct finance?)
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- What is "Intermediation" and why do we use Financial Intermediaries, instead of direct finance, for the most part?Which of the following has caused banks difficulty in estimating liquidity needs?A. competition for loans from other financial institutionsB. deregulation of interest rate ceilings on depositsC. competition for loans from nonfinancial institutionsD. a, b, and cWhy do some financial institutions offer more frequent compounding in the financial market?
- Which of the following is the function of the financial market ? Select one : a . It decides the interest rate b . It makes loan available c . It channels funds from lenders - savers to borrowers - spenders D. None of theseHow do you think financial institutions help financial market to work?What's the connection between financial intermediaries and securitization? When securitization moves forward, what happens to the financial intermediaries involved?
- Secondary Intermediaries are called as such because they depend heavily on other financial intermediaries like commercial banks to loanable funds. Included in this category are finance companies, mortgage banks, and real estate investment trusts. It is true or false?What are the difficulties associated with the financial system and how these challenges can be addressedWhat are the different types of financial institutions? Include a description of the main services offered by each? Explain with example the different type of risks faced by financial institutions?
- 2. If a bank wants to avoid volatility in its regulatory capital, which investment classification would be the most desirable, and which investment classification would be the least desirable? Does your answer differ depending on whether the bank is large or small? In other words, do large and small banks differ on how they can categorize unrealized gains/losses on AFS debt?Why is credit risk management important and what are the features of a loan or debt instrument it determines? What is the difference between a spot loan and revolving loan? What is loan commitment? What are the different rates that have replaced LIBOR and in what countries/economic blocs are they used in? What are the borrower and market specific factors that impact the return on a loan for a financial institution? Are higher interest rates a restrictive or stimulative form of monetary policy and explain your answer?