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Unformatted text preview: Chapter Study Questions 1 Chapter Study Questions: Chapter 14 FIN/370 14-1 . What are financial markets? What function do they perform? How would an economy be worse off without them? Financial markets are institutions and procedures that facilitate transactions in all types of financial securities, ((Keown, Martin, Petty, & Scott, 2005, p. 475). The function of a financial market is to distribute the savings in an economy to those who demand the savings (Keown, Martin, Petty, & Scott, 2005). An economy would be worse off without financial markets Chapter Study Questions 2 because the wealth of the economy would suffer without them; the rate of capital formation would not be as high, (Keown, Martin, Petty, & Scott, 2005, p. 476). 14-2. Define in a technical sense what we mean by financial intermediary . Give an example of your definition. The financial intermediary is the liaison or median between the firm and saver, it collects savings of individuals and issues it own securities in exchange for these savings (Keown, Martin, Petty,...
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