A well-functioning financial system does all of these EXCEPT: a. foster economic growth by directing savings to its most productive use. b. allocate risk among market participants. c. eliminate systematic risk through diversification. d. direct resources from savers to borrowers.
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A well-functioning financial system does all of these EXCEPT:
a. foster
b. allocate risk among market participants.
c. eliminate systematic risk through diversification.
d. direct resources from savers to borrowers.
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Solved in 2 steps
- One of the biggest problems for any economy is to figure out how to get or transfer money from people or firms who want to save (savers) to people or firms who want to borrow (investors). Explain how financial markets can help to solve this problem efficiently. Discuss how financial markets function and which tools they can offer to solve this problem. Discuss how financial systems are of crucial significance to adequate capital formation, which is indispensable to a speedy economic growth and development.Which of the following explains the relevance of financial institutions? a. Financial institutions spur economic activity by providing credit for business expansion. b. Financial institutions create profits for depositors. c. Financial institutions allow governments to print money. d. Financial institutions provide the main source of funding for start-ups.summarize how savers, financial institutions and borrowers interact to help the economy to create capital.
- A healthy and constantly evolving financial system is the foundation for economic efficiency and economic growth. Out of the six parts of the financial system, select two and explain why you believe they are most important elements for economic efficiency. Select two that you did not select and explain why you believe they are not the most important elements. 1. a) Money b) Financial instruments c) Financial markets d) Financial institutions e) Government regulatory agencies. f) Central banksA) How are credit markets different from goods markets and what are the major imperfections of credit markets? B) How does microfinance loans deal with these imperfections of the credit markets?How does the financial system coordinate saving and investment?
- Differing role of financial market in economyGive at least three examples of how savings can be channeled into productive investment. Why is investment so important for an economy? What do you sacrifice when you save today?Why would lenders want to see that a business already has some level of capitalization before giving it access to more capital by means of a loan?
- #1 Why should a financial investor care about diversification? #2 Is investing in housing always a very safe investment?If there is a weakening in time preferences among U.S. consumers and foreign entities that channel their wealth to the United States, then we can expect which of the following to increase? Select all that apply. Choose one or more: A. demand for loanable funds B. level of Investment C. supply of loanable funds D. Interest ratesWhich of the following is a benefit of using financial investment to raise financial capital? there is an impact on the ownership of the firm it is accessible to start ups there is added pressure for the business to succeed it is the most sraightforward approach