Adrian Staley FIN 3400 Paige White Ch. 3 Homework 9/3/17 3-1 How do financial markets that run freely and efficiently affect the standard of living in a country? Financial markets that run freely and efficiently affect the standard of living in a country positively. It allows an economy to flourish, because wherever there is a boom in the financial economy’s revenue, it allows a means and opportunity for a better standard of living. 3-2 What does it mean for a financial market to be considered (a) informationally efficient and (b) economically efficient? Whenever a financial market is considered informationally efficient, the prices of investments is bought and sold in the financial markets based on available information. The prices reflect existing information and adjust rather quickly when new info becomes available. Whenever a financial market is considered economically efficient, funds are allocated to their optimal use at the best costs. 3-3 Do you think investors can earn abnormal returns in financial markets that are at least semistrong-form efficient? I do not think that investors can earn an abnormal return in a semi strong-form efficient. 3-4 When the SEC approves a stock issue, it does not provide an opinion about the value of the stock. Do you think the SEC should give an opinion to investors on the appropriate value of the stock being issued? Explain. I think that the SEC should provide an opinion about the value of the stock, because I think that it would be beneficial to see what they think about the stock, it will probably give you a better understanding why the stock was approved. 3-5 What economic functions do financial intermediaries perform?
Adrian Staley FIN 3400 Paige White Ch. 3 Homework 9/3/17 They receive funds and disburse them to people or organizations that need them. It allows the output of an economy increases. 3-6 Do you think that the financial services industry will be more reregulated or deregulated in the future? Explain. I think that it will be reregulated in the future, because of the oversight that is needed to ensure that financial intermediaries need the regulations and oversight.
- Fall '17
- Shannon White
- Financial Markets