If financial markets were perfect and costless, would there be a need for financial institutions? Explain...
If financial markets were perfect and costless, would there be a
need for financial institutions? Explain your answer.
Homework Answers
Perfect financial market means a market in which all the information related to borrowing and lending are freely available to public and the prices of products and services are not influenced by the the power of any trader. In the perfect financial market trading is cost less and financial market can be accessed for free. In a perfect financial market no trader can influence the market as the prices of products reflects all the information.
Financial institutions would be needed for smooth functioning of the economy as it facilitate the service of lending and borrowing. Financial institutions help the investors with access fund to invest in the securities market, bond market, forex market and derivative market for return in accordance to risk and facilitate the lending to borrower. Thus, it help in the smooth functioning of the capitalist economy and the growth of the economy regardless if the financial market is perfect.
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If financial markets were perfect and costless, would there be a
need for financial institutions? Explain...
explain the difference between Financial institutions and financial markets
explain the difference between Financial institutions and financial markets
Discuss the function of financial institutions and financial markets? ( please explain in simple words)
Discuss the function of financial institutions and financial markets? ( please explain in simple words)
A financial system consists of both financial institutions and financial markets. Financial markets bring the “key...
A financial system consists of both financial institutions and financial markets. Financial markets bring the “key players” together and their funds. For this discussion, choose one of the functions of the financial markets and discuss how financial institutions play a role in this process.
A financial system consists of both financial institutions and financial markets. Financial markets bring the “key...
A financial system consists of both financial institutions and financial markets. Financial markets bring the “key players” together and their funds. For this discussion, choose one of the functions of the financial markets and discuss how financial institutions play a role in this process.
Explain the effect the Federal Reserve's policies have on financial markets, institutions and interest rates.
Explain the effect the Federal Reserve's policies have on financial markets, institutions and interest rates.
In the past, financial markets and institutions were less integrated due to distance or lack of...
In the past, financial markets and institutions were less integrated due to distance or lack of technology. But as the speed of communication increases, markets become more integrated, making interest rates more volatile to changing conditions. Even if a shock doesn’t occur in the same location as one FI, it will still be affected due to its connection with other markets, lenders, borrowers, and the government. What does everyone think about this statement? Do you agree or disagree?
In a world of perfect financial markets (but not necessarily product markets), is the cost of...
In a world of perfect financial markets (but not necessarily product markets), is the cost of capital of the firm independent of how it is operated and financed? Q 16.34
If international capital markets are well integrated and operate efficiently, will financial institutions be exposed to...
If international capital markets are well integrated and operate efficiently, will financial institutions be exposed to foreign exchange risk? What are the sources of foreign exchange risk for financial institutions?
Due to globalization, financial institutions operate in foreign markets or with foreign currencies. Discuss the foreign...
Due to globalization, financial institutions operate in foreign markets or with foreign currencies. Discuss the foreign exchange risks faced by financial institutions.
pate in the financial markets. Interpret the following statements. tory institutions, invest in mutual funds, purchas...
pate in the financial markets. Interpret the following statements. tory institutions, invest in mutual funds, purchas insurance policies, or invest in pensions? Flow of Funds Exercise Roles of Financial Markets and Institutions This continuing exercise focuses on the interactions of a single manufacturing firm (Carson Company) in the financial markets. It illustrates how financial markets and institutions are integrated and facilitate the flow of funds in the business and financial environment. At the end of every chapter, this exercise provides...
In a world of perfect financial markets (but not necessarily product markets), is the cost of capital of the firm independent of how it is operated and financed? Q 16.34
pate in the financial markets. Interpret the following statements. tory institutions, invest in mutual funds, purchas insurance policies, or invest in pensions? Flow of Funds Exercise Roles of Financial Markets and Institutions This continuing exercise focuses on the interactions of a single manufacturing firm (Carson Company) in the financial markets. It illustrates how financial markets and institutions are integrated and facilitate the flow of funds in the business and financial environment. At the end of every chapter, this exercise provides...
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