Define the five key financial assets

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1. Briefly define each of the five key financial assets. Is every financial asset also a financial security? Is it possible that what a saver would consider a financial asset a borrower would consider a financial liability?

2. Typically, you will receive a very low interest rate on money you deposit in a bank. Interest rates on car loans and business loans are much higher. Why, then, do most people prefer putting their money in a bank to lending it directly to individuals or businesses?

3. Suppose financial intermediaries did not exist and only direct finance were possible. How would this affect the process of an individual buying a car or a house? Evaluate it.

Reference no: EM132715359

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