he financial sector is heavily regulated. Explain how government regulations help solve information problems, increasing the effectiveness of financial markets and institutions.(LOI)
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The financial sector is heavily regulated. Explain how government regulations help solve information problems, increasing the effectiveness of financial markets and institutions.(LOI)
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- Many countries have policies that limit how much interest a moneylender can charge on a loan. Do you think these limits are a good idea? Who benefits from the laws and who loses? What are likely to be the long-term effects of such laws? Tips: For part 2, you may think about how a low interest rate would affect the poor and those who owe huge debts. For part 3, you may think about how it would affect the profitability of the banking sector and the supply of lending (will lenders be encouraged to lend more?), and what implications it may have for "credit rationing" (being credit constrained).D4) Discuss the role and functions of financial markets and institutions in a modern economy. Why are financial intermediaries so important to a well-functioning economy?The financial system in Jamaica has been the subject of much attention since the news broke of the alleged fraud at Stocks and Securities Limited (SSL). The governor of the Bank of Jamaica (BOJ) has been fielding calls from concerned investors, international financial institutions, and even other regional regulators concerning the impact of this situation and the negative media reporting would have on the stability of the financial system in Jamaica and the Caribbean region.The governor would like to preserve confidence in the financial markets and institutions and has decided to embark on a series of educational “road-shows” where he will address targeted stakeholders such as the American Chamber of Commerce (AMCHAM), investor groups and the media.In this regard, the governor has assigned your team of senior professionals employed at the Bank of Jamaica to prepare a presentation slide deck for his address. Give an overview of the structure of the Jamaica financial systemThe role of…
- To support economic growth, the Indonesian government is committed to making the Islamic economy a source of national economic growth, one of which is through Islamic banking. In general, the form of a sharia bank business consists of a Commercial Bank and a Sharia Rural Bank, with a number of main differences. Banks are basically entities that collect funds from the public in the form of financing or in other words carry out the function of financial intermediation. There are a number of differences between Islamic Commercial Banks and BPRS. Explain what you know the differences in the bank!Answer the following questions based on the economy of Canada: a) When was the last time the government of Canada bailed out a financial institution and to what extent do you agree with government bailouts of financial institutions? (maximum 400 words) b) In what ways do you think Canada’s financial system has had to adjust to the impact of COVID-19 pandemic? (maximum 400 words)Why are financial intermediaries the most heavily regulated businesses in the economy? Explain why stock market is an important factor in business investment decisions? What is inflation? What explains inflation? If there is a recession, will it be more difficult to find a job when you graduate? Explain. What are the six types of regulations the government employs in an attempt to ensure the soundness of our financial intermediaries? Explain. Explain the difference between debt and equity markets. primary and secondary markets, exchange and over the counter markets and money and capital markets. What is the difference between foreign bond and a Eurobond? Which institutions are subject to Federal Deposit Insurance corporation (FDIC) regulations, and what is the nature of the regulations? What are the reasons for high transaction costs to exist in a barter economy? What separates the assets included in M1 from the assets included in M2? Does it matter what definition of money policy…
- During the 2007-2009 period, the US government made its most dramatic interventions in financial markets since the 1930s. It has been argued that the current crisis could redraw the boundaries between government and markets. For some, “freer and more flexible markets will still do more for the world economy than the heavy hand of government” whereas for others “big banking crises are ultimately solved by early and decisive government action and financial regulation.” Evaluate these positions.- Financial intermediaries act to reallocate (move) money from borrowers to savers. True FalseJohnny Bigbucks is 58 years old and lives in rural Mississippi. He has been very successful in several business ventures, but with the downturn in the economy, he finds his business interests quickly on the demise. The businesses are all separate legal entities, but as many small business owners, Johnny guaranteed many of the business debts. With the businesses all but shut down and without funds to meet their obligations, creditors of the businesses are now turning to Johnny on the guarantees they have. Several creditors, SmallBiz Bank, and Littleguy Bank, have sued Johnny and obtained default judgments for the obligations, and are about to attempt to collect those debts from Johnny. Fortunately for Johnny, he has accumulated substantial wealth ($1.5 million) in creditor-protected retirement accounts. All of his other valuable assets, including his $600,000 home, custom pontoon boat, luxury car, and other items are titled his wife, Betsy. Johnny is judgment proof in terms of any…
- EXERCISE 10.9 LIMITS ON LENDING Many countries have policies that limit how much interest a moneylender can charge on a loan. Do you think these limits are a good idea? Who benefits from the laws and who loses? What are likely to be the long-term effects of such laws? Tips: For Question 2, you may think about how a low interest rate would affect the poor and those who owe huge debts. For Question 3, you may think about how it would affect the profitability of the banking sector and the supply of lending (will lenders be encouraged to lend more?), and what implications it may have for "credit rationing" (being credit constrained).What is a fiduciary duty? Identify three reasons that fulfilling fiduciary duty can be difficult in the investment profession. (Max 200 words)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.
