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7. How do FIs solve the information and related agency costs when household savers
invest directly in securities issued by corporations? What are agency costs? What
is the free-rider problem?
8. What often is the benefit to the lenders, borrowers, and financial markets in general
of the solution to the information problem provided by large financial institutions? sau86198_ch01.qxd 22 Part One 4/21/02 8:52 PM Page 22 Introduction 9. How do FIs alleviate the problem of liquidity risk faced by investors who wish to
invest in the securities of corporations?
10. How do financial institutions help individual savers diversify their portfolio risks?
Which type of financial institution is best able to achieve this goal?
11. How can financial institutions invest in high-risk assets with funding provided by
low-risk liabilities from savers?
12. How can individual savers use financial institutions to reduce the transaction costs
of investing in financial assets?
13. What is maturity intermediation? What are some of the ways in which the risks...
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This document was uploaded on 03/09/2014 for the course ACC 301 at HELP University.
- Spring '09