In world without information and transaction costs, financial intermediaries would not exist." Is the true, false, or uncertain?.Explain your answer
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Q: Which of the following statements about transaction costs and financial intermediation is not true?
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In world without information and transaction costs, financial intermediaries would not exist."
Is the true, false, or uncertain?.Explain your answer
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- Explain the problems of adverse selection and moral hazard caused by asymmetricinformation. How can financial intermediaries alleviate those problems?Which of the following arguments supports the view that regulation is not necessary, particularly to the extent that it currently exists? Select one: a. Markets for information are not efficient and therefore produce a sub-optimum amount of information, given the problem of 'free riders'. b. Accounting information is like any other good, and people will be prepared to pay for it to the extent that it has a use. c. Investors need protection from fraudulent organisations that may produce misleading information. d. Information asymmetry exists because not everyone has the same power over resources to obtain the information they need.What are the disadvantages of the financial intermediaries and the negative ways they can impact the economy?
- what type of MIS tools are currently being used in Financial management? What MIS Application are you certainly able to use?1. Which of the following statements most appropriately describe how agency cost affect the firms choice structure? Explain. a. When firm owners borrow money they have an incentive to engage in excessive risk taking (that is investing in very risky projects). Since they are managing someone else money.b. When firm have very limited investment opportunities and little debt financing combine with wealth profit that provide them with free cash flow, their management team might squander the firms' earnings on questionable investments. 2. What is the primary weakness of using EBIT-EPS analysis as a financing tool. 3. Why might firms who's sale level change drastically overtime, choose to use debt only sparingly in their capital structure 4. What does the term independence hypothesis means as it applies to capital structure theory 5. Explain how industry norms might be used by the finance manager in the design of the company's financing mix note: if you can provide the source of the info,…Financial analysis is significant because it a. Ignores qualitative aspect b. Judges operational efficiency c. Suffers from the limitations of financial statements d. It is affected by personal ability and bias of the analysis
- 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?How could the presentation of financial information pose an ethical dilemma to a business professional who is attempting to meet the demands of users who are interested in similar information?A process that create a financial position that offsets the risk of an ongoing business process is which method of handling risk? Transfer the risk Keep the risk Avoid the risk Mitigate the risk
- Discuss areas where information asymmetry is a problem in financial markets, identifying the problems caused by it and the actions that can be taken to minimise the effects of information asymmetryWhy may financial information alone be insufficient for the ongoing informational needs of operators/workers, managers, and executives?How do transaction costs and asymmetric information hinder the growth of financial markets?