Explain how economic transactions between household savers

Assignment Help Finance Basics

Reference no: EM13502259

1. Explain how economic transactions between household savers of funds and corporate users of funds would occur in a world without financial institutions.

2.Identify and explain the two functions FIs perform that would enable the smooth flow of funds from household savers to corporate users.

3.In what sense are the financial claims of FIs considered secondary securities, while the financial claims of commercial corporations are considered primary securities? How does the transformation process, or intermediation, reduce the risk, or economic disincentives, to the savers?

4. Explain how financial institutions act as delegated monitors. What secondary benefits often accrue to the entire financial system because of this monitoring process?

5.What are agency costs? How do FIs solve the information and related agency costs when household savers invest directly in securities issued by corporations?

6.How can financial institutions invest in high-risk assets with funding provided by low-risk liabilities from savers?

7.What is maturity intermediation? What are some of the ways in which the risks of maturity intermediation are managed by financial intermediaries?

8.How do depository institutions such as commercial banks assist in the implementation and transmission of monetary policy?

9.What is negative externality? In what ways do the existence of negative externalities justify the extra regulatory attention received by financial institutions?

10. If financial markets operated perfectly and costlessly, would there be a need for financial institutions?

Reference no: EM13502259

Questions Cloud

Both bridgette and eddie are registered for gst : Both Bridgette and Eddie are registered for GST. What are the GST considerations for each party in regard to this arrangement (considering "supply")?

What is the speed of the water in the narrower part : A water pipe narrows from a radius of r1 = 4.33 cm to a radius of r2 = 3.39 cm. what is the speed of the water in the narrower part

Explain the mixed drink is only composed of ethyl alcohol : What is the mass percent composition for each component of the solution. Assume that the mixed drink is only composed of ethyl alcohol and water (pretty boring).

Determine the resulting angular speed of the platform : You stand on a frictional platform that is rotating at 1.3 rev/s. Your arms are outstretched, and you hold a heavy weight in each hand. What is the resulting angular speed of the platform

Explain how economic transactions between household savers : Explain how economic transactions between household savers of funds and corporate users of funds would occur in a world without financial institutions.

Case study on think before you spend : Read headline "Think before you spend" and then, drawing on material covered in this subject, Accounting Theory, identify some ways in which you think corporations would respond to such allegations.

Explain the reaction of chymotrypsin with n-acetylvaline : The Km for the reaction of chymotrypsin with N-acetylvaline ethyl ester is 8.8 x 10-2 M, and the Km for the reaction of chymotrypsin with N-acetyltyrosine ethyl ester is 6.6 x 10-4 M.

Evaluate the molar mass of the compound : After a titration to compute the molar mass of the compound and the value of n in the formula K3[Fe(C2O4)3]*nH2O

How can bartering improve a company''s cash position : How can bartering improve a company's cash position?

User Account

All Pages