Unformatted text preview: s 1. Explain how economic transactions between household savers of funds and corporate users of funds would occur in a world without financial intermediaries.
2. Identify and explain three economic disincentives that probably would dampen the
flow of funds between household savers of funds and corporate users of funds in
an economic world without financial intermediaries.
3. Identify and explain the two functions in which FIs may specialize that would enable the smooth flow of funds from household savers to corporate users.
4. In what sense are the financial claims of FIs considered secondary securities,
while the financial claims of commercial corporations are considered primary securities? How does the transformation process, or intermediation, reduce the risk,
or economic disincentives, to savers?
5. Explain how financial institutions act as delegated monitors. What secondary benefits often accrue to the entire financial system because of this monitoring process?
6. What are five general areas of FI specialness that are caused by providing various
services to sectors of the...
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- Spring '09
- Accounting, Financial services, FIS, Depository Institutions