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Study Guide for Mankiw's Brief Principles of Macroeconomics, 7th
7th Edition
ISBN: 9781285864266
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 8, Problem 2QR
To determine
Why diversification of holdings is recommended and which institution does it for the public.
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Why is it important for people who own stocks and bonds to diversify their holdings? What type of financial institution makes diversification easier?
Would the interest rate increase be more likely to hurt or help the financial institution’s profitability?
Why is it so important to an economy to have fully developed financial markets?
Chapter 8 Solutions
Study Guide for Mankiw's Brief Principles of Macroeconomics, 7th
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- Economists assert that financial markets serve the function of efficiently allocating capital. What is meant by the function? Explain and include an example.arrow_forwardWhich type of financial intermediary provides individual investors with professional management of their money and diversification in order to limit the risk of investing? A. mutual funds B. insurance companies C. hedge funds D. investment banksarrow_forwardCan a financial market be complete and allow for arbitrage opportunities at the same time?arrow_forward
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