Which of the following is not a role of financial intermediaries?O A. Maturity intermediationB. DiversificationC. Reducing contracting (transaction) costsD. Providing payment mechanismsE, None of the above

In a market, financial intermediaries are the individual who work for making a connection between…

Answered: Which of the following is not a role of…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter17: Financial Markets

Section: Chapter Questions

Problem 1SCQ: Answer these three questions about early-stage corporate finance: Why do very small companies tend...

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Similar questions

Answer these three questions about early-stage corporate finance: Why do very small companies tend to raise money from private investors instead of through an IPO? Why do small, young companies often prefer an IPO to borrowing from a bank or issuing bonds? Who has better information about whether a small firm is likely to earn profits, a venture capitalist or a potential bondholder, and why?
Why are banks called financial intermediaries?
Because financial intermediaries operate on a big scale, this relates to minimizing the costs of transactions incurred by them. *a. Economies of Scopeb. Economies of Scalec. Economic Convenienced. Economies of Costse. None of the choices.
1. They serve as coordinators who link the buyers and sellers of financial securities, and sometimes take positions in the securities. *Financial intermediariesGovernmentInvestorsMarket maker 2. A contract requiring a specified future monetary payment at a specified future point in time in exchange for the delivery of a specific asset is called a: *nonconvertible option.hedge.long contract.swap.
Explain the problems of adverse selection and moral hazard caused by asymmetricinformation. How can financial intermediaries alleviate those problems?(b) Explain the Diamond model of delegated monitoring
Allen would like to open a business to produce a software that he thinks would be well-received by the market. However, the investment needed to start a busi- ness is very high and Allen could barely cover it on his own. The software is very likely to be successful and generate profits, but it takes 2 years before profits are generated. Explain why the existence of a financial intermediary, like a bank, makes Allen’s investment more likely.
What are the basic risk faced by financial intermediaries? Discuss each throughly.
Explain why pre-payment risk is more likely when a mortgage is young thanwhen the mortgage is approaching its completion date.
3) What financial institutions are doing a good job at convincing younger generations to place their money/trust in them? Why is their approach/messaging effective?
They act as mediators between two parties: those who supply funds and those who seek them. *A. Financial IntermediariesB. None of the choicesC. Financial SecuritiesD. DSUsE. SSUs
If a perpetuity bond has an interest payment of $60 and your required yield is 20%, the MOST you would be willing to pay for the bond is $: a. 300. b. 600. c. 120. d. 6,000. QUESTION 78 Which of these statements about cryptocurrency is the MOST accurate? a. Its role as a medium of exchange is very high. b. The U.S. government serves as a guarantor whenever a cryptocurrency is hacked. c. It does not serve as either a unit of account or as a store of value. d. The supply of cryptocurrency is not managed by any government agency in any country.
Over-the-counter credit derivatives are private contractsbetween two companies; is it appropriate for the government to force them to be soldon regulated exchanges like commodities are? Why or why not?

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Which of the following is not a role of financial intermediaries? A. Maturity intermediation O B. Diversification OC. Reducing contracting (transaction) costs O D. Providing payment mechanisms O E. None of the above