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Which of the following best defines a financial intermediary?
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- 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 costsThe following are the common characteristics of financial intermediaries, except: *a. Providers of loans.b. Maintains stability in the capital market.c. Making the investors rich.d. Providing investment adviceexplain the functions performed by financial intermediaries and how they can promote economic efficiency in financial markets.
- Which of the following is TRUE about interest rates offered by financial Intermediaries? *A.The interest rates issued by financial intermediaries are standard across different financial institutions.B. Interest rates paid by DSUs are lower and SSUs are paid with higher interest rates.C. Interest rates issued by financial intermediaries are based solely on the issuance of central banks.D. Interest rates paid to SSUs are lower compared to the interest they collect to DSUs.Which of the following is NOT TRUE about Insurance companies? *a. They are non-depository institutions that does not accept deposits.b. Collects deposits like banks and reinvests them in profitable financial securities.c. Collects premiums from clients for payment of policies.d. Clients transfer risks to insurance companies in exchange for premiums paid.e. None of the choices.A corporation acquires new funds only when its securities are sold in the( ) 1) secondary market by an investment bank 2) primary market by a stock exchange broker 3) secondary market by a securities dealer 4) secondary market by a commercial bank 5) primary market by securities commission in the capacity of having a legal authority 6) none of the answers are correct
- “In a world without information costs and transactioncosts, financial intermediaries would not exist.” Is thisstatement true, false, or uncertain? Explain your answer.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…The shadow banking system refers to Non-bank financial firms that provide profit advice to hedge fund managers. The unregulated non-bank financial firms engaged in borrowing from investors and lending to households and firms. Non-bank financial firms that acted as stock brokers by buying and selling stocks in an effort to make a profit. Non-bank financial firms that purchased government bonds.
- What do the authors mean when they state that financial intermediaries can achieve economies of scale with respect to transaction costs? A. Intermediaries can spread transaction costs across larger transaction volumes, so the cost per unit is lower. B. Intermediaries tend to specialize in certain types of transactions, so their costs are lower because they operate at lower volume than other types of financial firms.Identify several different types of financial institutions, and describe the main services these institutions offerWhich of the following is NOT TRUE about Financial Intermediaries? *A. Financial Intermediaries are institutions that serves as a bridge between the SSUs and DSUs.B. Financial Intermediaries makes the financial system more efficient.C. Financial Intermediaries earn profits through various transactions and services they offer.D. Financial Intermediaries offers investment advices.