PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 14, Problem 13PS
Financial markets and intermediaries Financial markets and intermediaries channel savings from investors to corporate investment. The savings make this journey by many different routes. Give a specific example for each of the following routes:
- a. Investor to financial intermediary, to financial markets, and to the corporation.
- b. Investor to financial markets, to a financial intermediary, and to the corporation.
- c. Investor to financial markets, to a financial intermediary, back to financial markets, and to the corporation.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Briefly explain the following investment channels with each one’s own returns and Risks.
Bank Deposits
Insurance Certificates
National Savings Certificates
Private Company’s shares
Precious metal investment
Class book: Fundamentals of Corporate Finance by Brealey, Myers, and Marcus
Functions of Financial Markets.Fill in the blanks in the following passage by choosing the most appropriate term from the following list: CFO, save, financial intermediaries, stock market, savings, real investment, bonds, commodity markets, mutual funds, shares, liquid, ETF's, banks. Each term should be used only once.
Financial markets and ___________ channel _____ to ______. They also channel money from individuals who want to ________ for the future to those who need cash to spend today. A third function of financial markets is to allow individuals and businesses to adjust their risk. For example, _______, such as the Vanguard Index fund, and ________, such as SPDRs or "spiders," allow individuals to spread their risk across a loarge nmber of stocks. Financial markets provide other mechanisms for sharing risks. For example, a wheat farmer and a baker may use the ______ to reduce their exposure to wheat…
Finance professionals make decisions that fall into three distinctive areas: corporate finance, capital markets, and investments. Below is a set of decisions made by finance professionals. Categorize the decisions according to the area of finance to which they belong.
Decision
Corporate Finance
Capital Markets
Investments
Ethan must make a decision on how to cut costs so that his company can generate extra cash flow to acquire assets.
Radford works for an investment bank and makes decisions about the sale of new common stock by ABCL Inc.
Aakash works for a financial advising firm. He must create a financial plan and come up with a list of securities in which his client can invest. Aakash must make decisions regarding the investments that he should recommend to his clients to include in their portfolio.
Chapter 14 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 14 - Terminology Fill in the blanks, using the...Ch. 14 - Prob. 2PSCh. 14 - Sources of funds True or false? a. Net stock...Ch. 14 - Prob. 4PSCh. 14 - Company ownership What do we mean when we say that...Ch. 14 - Prob. 6PSCh. 14 - Prob. 7PSCh. 14 - Prob. 8PSCh. 14 - Corporate debt Which of the following features...Ch. 14 - Financial markets and intermediaries. True or...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Title Every financial market has the following characteristic: Description Function of Financial Markets 1) Every financial market has the following characteristic: A) It determines the level of interest rates. B) It allows common stock to be traded. C) It allows loans to be made. D) It channels funds from lenders-savers to borrowers-spenders. 2) Financial markets have the basic function of A) getting people with funds to lend together with people who want to borrow funds. B) assuring that the swings in the business cycle are less pronounced. C) assuring that governments need never resort to printing money. D) providing a risk-free repository of spending power. 3) Financial markets improve economic welfare because A) they channel funds from investors to savers. B) they allow consumers to time their purchase better. C) they weed out inefficient firms. D) eliminate the need for indirect finance.arrow_forwardWhich function of a financial intermediary reduces transaction and information costs between a corporation and individual which may encourage a higher rate of savings? Select one: a. Administration of the payments mechanism b. Information production services. c. Money supply management. d. Asset transformation services. e. Brokerage services.arrow_forwardWhich of the following can be described as involving indirect finance? a. People pay premiums to an insurance company b. A corporation issues new shares to people c. People lend money to their friends d. People buy bonds from companiesarrow_forward
- A number of the advisory services investment banks provide for their corporate clients are defined as off-balance-sheet business. One service is placing new issues with institutional investors. Outline the nature of this service and explain why it might be sought after by large corporationsarrow_forwardWhich of the following roles provide funds to be used by financial managers to finance corporate growth? A. Financial market B. Financial intermediaries C. Investors D. Suppliersarrow_forwardWhich statement is not correct? A. The main objective (role) of financial intermediaries is to convert savings of SSU’s into investments. B. Financial intermediaries purchase financial claims with a set of characteristics from DSU’s and sell financial claims with characteristics tailored to the desires of the SSU’s. C. Financial intermediaries normally absorb the risks from SSU’s and manage the risks by investing the funds received from SSU’s into various securities. D. Financial intermediaries serve solely as intermediaries with the financial markets and never serve as investors. E. none of the abovearrow_forward
- Consider a large banking group with businesses in retail banking, equity trading, and mergers and acquisitions (M&A) advisory. Discuss its potential for creating value based on the possible underlying sources of competitive advantage for each of these three business areasarrow_forwardIf financial managers are to achieve corporate goals, they require well-developed financial markets where transfer of wealth from savers to borrowers is efficient in both pricing and operational cost.Explain the meaning of: informational efficiency of financial markets. Operational efficiency of financial markets. Explain the benefits that are enjoyed by investors because of existence of capital market in Rwanda All 3 question i have asked someone who doing accounting ,business or economics may answer Thank you !arrow_forwardClass book: Fundamentals of Corporate Finance by Brealey, Myers, and Marcus Financial Markets and Intermediaries. List the major functions of financial markets and intermediaries in a modern financial system.arrow_forward
- Identify a key factor that has contributed to the efficiency of financial planning in the bank channel. Selling stocks and bonds to attract the HNW client. Selling mutual fund wraps instead of stand-alone mutual funds Product expansion to retain clients throughout their lifecycles. Selling mutual funds with the highest management fees.arrow_forwardWhich of the following sources of entrepreneurial financing are available to ventures that have already started to conduct business and generate sales? bank financingventure capitalpublic financingall of thesearrow_forwardDescribe the nature of the basic services of financial institutions. What are the channels through which the financial system matches savers and borrowers.? What is a financial intermediary?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Pfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Pfin (with Mindtap, 1 Term Printed Access Card) (...
Finance
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Cengage Learning
Securities Markets and Transactions Pt1; Author: Larry Byerly;https://www.youtube.com/watch?v=v0ClVlaxWFY;License: Standard Youtube License