3 answernegotiable certificates of deposit cds

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3. Answer:Negotiable Certificates of Deposit (CDs), Repurchase Agreements, Treasury Bills, Commercial Paper, Bankers Acceptances, 4. Answer: to make information available to investors and maintain the soundness of financial system. 5. Answer: The SEC requires timely provision of information. Financial stability is promoted by regulations restricting entry, disclosure and/or examination, restrictions on assets and risk taking, deposit insurance, limits on competition, and interest rate controls. . Essay questions 1.Answer: a) Equities often make periodic payments (dividends) to their holders and are considered long-term securities because they have no maturity date. b) In addition, owning stock means that you own a portion of the firm and thus have the right to vote on issues important to the firm and to elect its directors. c) The main disadvantage of owning a corporation’s equities rather than its debt is that an equity holder is a residual claimant that means the corporation must pay all its debt holders before it pays its equity holders. However, the
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equity holders benefit directly from any increases in the corporation’s profitability or asset value because equities confer ownership rights on the equity holders. 2. Answer: Asymmetric information is uneven information, which creates the problems of adverse selection and moral hazard. Adverse selection is having a disproportionate number of high-risk loan applications. Moral hazard is the risk that the borrower will engage in risky behavior after the loan is made. Adverse selection is a problem before a loan is made, and moral hazard is a problem that exists after a loan is made. Financial intermediaries develop the expertise
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