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Lecture 15 - .3 mm.5 can..3 Tam—<5...

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Unformatted text preview: .3 mm .5: can.» .3 Tam—<5. ~><Qmm_z.nm>> moo—t. QZ< ...._._<QZ_._.m<_>_ szmmmuOm—n. hmwmhm ._._<>> ”.0 Q2m mi... nZ<_>=._m_.__ ”.0 14¢ m1... Wed’cec/M E . W 96“ Whumk (‘3 ”0 Key Aspects of the Financial System I 1. Financial intermediaries are the most important source of external fiinds to firms. 2. The stock market is a less important source of external funds to firms than IS the bond market. 3. Debt contracts —— honds and loans - often require collateral or restrictive covenants. 37 w w w: c. a- vawm M Ill-Jul ‘tvausach‘wq us’n’ h Emu: ¢6 SM 3\ SQ‘PMU‘QVZI. 3k SM‘Wewu'é . f“ M MM“! "'3 ”WWW" AU flu“? “ha iuwfiwfi Seam/i +131 We! Graham“ Commassm (SEQ M31 Finangcd 3.me “‘45 Zen/d pwbtvwx M ?Wle§ WEM Bum/o6 b WW‘ ”QUMIWM’MB (Mame Maud D CosHY 5+0? vevcfccdtm 3\ Lack. ’6 (vidwwdvme _ Managm‘tw j: N mfifi i=5! § ficwl ”9%) W9; 94:”; 314'! 2 Shaw-t +1 M T. W“ T00 wqu V; m VlaSSuVMé (ka‘l‘M ijHlaQ Pubh‘c 0%«4m3 (IPC) To vcdw mm mm LOH“ (can! cud laud, leudw WWW ‘” Hlfik Mad ww'HA w lbw-cw Owe Wm M Q“ afiwfi D ‘Qb €W+L4N 1.: Band Wi'hx M specific al’afmg Key Aspects of the Financial System 1. Financial intermediaries are the most important source of ' external funds to firms heeaase they reduce transactions costs and became they reduce adverse selection and moral hazard problems. 2., The stock market is a less important source of external funds to firms than rs the bond market because of moral hazard problems w; 3"th equity contracts. 3 Debt contracts ——— bonds and loans — often require collateral 0r restrictive c0venants because of moral hazard problems WNW/LCM 5 ”Mk ( ...
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