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- What are some ways that someone looking for a loan might reassure a bank that is faced with imperfect information about whether the borrower will repay the loan?: (A) Explain primary and secondary functions of Commercial Banks? (B) Discuss in detail, how commercial banks employ their funds to earn profit? (800 words)Question: Explain, using examples, the importance of financial intermediation to the flow of funds in an economy.
- Carly wants to buy and operate an ice-cream truckbut doesn’t have the financial resources to start thebusiness. She borrows $20,000 from her friendFreddie, to whom she promises an interest rateof 7 percent, and gets another $30,000 from herfriend Sam, to whom she promises a third of herprofits. What best describes this situation?a. Freddie is a stockholder, and Carly is abondholder.b. Freddie is a stockholder, and Sam is abondholder.c. Sam is a stockholder, and Carly is a bondholder.d. Sam is a stockholder, and Freddie is abondholder.Draw the demandand supply curves forthe bond market, andidentify the equilibrium interest rate.Q) . __________ are an efficient and convenient way for governments and corporations to borrow large sums of money from investors for a long period of time. Credit cards, Stocks, Bonds, Bank loans Explains it correctly
- 1. One of the consideration in making investments which allows the investor to increase the value of its assets to offset increase in the level of prices. a. TAX SHELTERb. LIQUIDITYc. INFLATION HEDGEd. PROTECTION OF CAPITAL 2. It facilitate the flow of funds from the suppliers to the demanders in the financial market. *a. GOVERNMENTb. FINANCIAL INSTITUTIONc. NET DEMANDERS OF FUNDSd. NET SUPPLIER OF FUNDSSuppose the government borrows $20 billion more next year than this year. a. Use a supply-and-demand diagram to analyze this policy. Does the interest rate rise or fall? b. What happens to investments?To private savings?To public savings?To national savings? Compare the size of the changes to the $20 billion of extra government borrowing. c.How does the elasticity of supply of loanable funds affect the size of these changes? d. How does the elasticity of demand of loanable funds affect the size of these changes?1.Which of the following is not a financial asset? a share of Coca-Cola stock a corporate bond an IOU a piece of real estate a Treasury bond