What can financial institution do for surplus economic unit, Financial Management

Assignment Help:

What can a financial institution often do for a surplus economic unit that it would have difficulty doing for itself if the surplus economic unit (SEU) were to deal directly with a deficit economic unit (DEU)?

Surplus economic units do not generally have the expertise to define if a deficit economic units can and will make good on their obligations, thus it is difficult for them to predict while a would-be deficit economic unit will be unsuccessful to pay what it owes.  Such type of a failure is likely to be devastating to a surplus economic unit which has lent a proportionately large amount of money.  On the contrary, a financial institution is in a better position to expect who will pay and who won't.  It is also in a better position, comprising greater financial resources, to occasionally absorb a loss while someone fails to pay. (This is just one instance of the beneficial things financial institutions do for SEUs).


Related Discussions:- What can financial institution do for surplus economic unit

Illustrate report on cash flow budget, Q. Illustrate report on cash flow bu...

Q. Illustrate report on cash flow budget? The cash flows The principal reason why certain statistics were not included in the cash flows is that they are incremental cash

Importance of a sinking fund, "The emphasis on the practice of good corpora...

"The emphasis on the practice of good corporate governance has brought about more negative than positive implications to public-listed companies". Do you agree with the above st

What are a bank''s primary reserves, What are a bank's primary reserves ? ...

What are a bank's primary reserves ? When the Fed sets reserve requirements, what is its primary goal? Vault deposits and cash in the bank's account at the Fed are used to pe

Which ratios would a banker be most interested, Which ratios would a banker...

Which ratios would a banker be most interested in when considering whether to approve an application for a short-term business loan? Explain. Bankers and another lenders use li

Performance evaluation, Performance evaluation One can determine this b...

Performance evaluation One can determine this by comparing the cash flow from assets and cost of capital. 1. Cash flow from assets Cash flow from assets is calculated

Compute the discount and premium, Suppose the bid-ask spot prices for one B...

Suppose the bid-ask spot prices for one British pound are $1.50 and $1.60 respectively. 1. Compute the bid-ask prices for one US dollar in terms of British pound. 2. Suppose

Review of financial research report, This assignment is an analysis of a US...

This assignment is an analysis of a US publicly-traded company; its common stock could be a prospective investment.  The report is due in Week 10, in needs to be at least 5 pages,

Illustrating a straddle, Options Traded on Legal and General August 14  200...

Options Traded on Legal and General August 14  2009 Share   Price         Exercise      Price    Calls       Puts                                 Sep        Dec        Mar

efficient variance reduction, Assume we are in the midst of the financial ...

Assume we are in the midst of the financial crisis in October 2008. Your firm is considering the purchase of a 10 year put option on the S&P 500 Index. You are analyzing the pricin

Investment of surplus cash, I need a report on the topic Investment of Surp...

I need a report on the topic Investment of Surplus Cash. Can you please assist me for Investment of Surplus Cash report for about 2000 words?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd