Why would a company want to hold a lot of cash and marketable securities?

Q: How do transaction costs and asymmetric information hinder the growth of financial markets?

A: Transaction cost : transaction cost are expense incurred when buying or selling goods or services.…

Q: what is meant by “The money market is necessary but not sufficient for the liquidity of securities…

A: Solution- The money market is an organized exchange market where participants can lend and borrow…

Q: Explain in detail the function played by the money market in the financial market.

A: Money market is a type of market which involves trading in short-term debt financial instruments.

Q: The Money Markets is different from the Capital Markets. What are the financial instruments traded…

A: Money Market : Money market is the financial market where the instruments that have a short term…

Q: Do you agree that banks have high operating risks? Why?

A: The notion of operational risk in the banking system does not seem to be new. Nevertheless, it was…

Q: c) What are the benefits and risks of off-balance-sheet (OBS) activities to a bank?

A: Off-balance-sheet (OBS) activities refer to financial transactions or arrangements that are not…

Q: Which of the following is the risk due to a firm's industry?      Business risk     Financial…

A: In the ever-changing landscape of finance and investments, understanding different types of risks is…

Q: Which one of the following is NOT a 'Money Market Instrument'? Select one: a. Certificate of…

A: There are two types of markets are present: 1. Money market. 2. Capital market.

Q: Explain the statement “The money market is necessary but not sufficient for the liquidity of…

A: Money market instruments would be considered as investments under short term securities. These…

Q: Provide an explanation of whether it is advantageous for a bank to classify debt investments as…

A: ANSWER   Provide an explanation of whether it is advantageous for a bank to classify debt…

Q: What are the implications of the transformation function for the liquidity position of the bank?

A: Answer: Introduction: Liquidity is nothing but the ability of the bank to turn money into cash and…

Q: 1. Explain how capital reduces banking risks. Discuss the importance of cash flows and economic…

A: Capital reduces banking risks:  It reduces banking risk by protecting against insolvency. It is used…

Q: Why Central banks requires banks to hold that amount of money?  explain ?

A: Banks accept public deposits and lend that amount as loan to individual and companies at a higher…

Q: dows banking is a business industry?

A: Business is an activity to produce and sell and the products or rendering services above the actual…

Q: The business holds cash, treasury notes, and corporate bonds. It is exposing itself to interest rate…

A: Since business is exposing itself to interest rate risk, it is ready to bear or accept risk.

Q: How does capital protect a bank from failure?  Why are banks currently holding capital well above…

A: Introduction: Capital is a bank's own funds and it is the money obtained from its shareholders and…

Q: Explain the concept of liquidity risk in banking. Why is it important to control liquidity risk?

A: Liquidity refers to the ability of a bank to meet its cash and collateral obligations without…

Q: How relevant is capital to the operations of universal banks

A: Banks refer to the financial institution that is licensed to receive deposits and lend out loans.…

Q: Which of the following types of financial risk can be effectively managed by holding a lot of…

A: Step1 The chance of losing money on an investment or business transaction is referred to as…

Q: Liquidity risk is a. The risk of doing business in a particular industry or environment b. The…

A: When short term debt obligations of individual investor or business or financial institutions are…

Q: What part of a firm's balance sheet can be used as collateral?

A: The financial position of the company can be arrived from the income statement prepared by the…

Q: Which of the following is the risk due to a firm's debt usage?      Business risk     Financial…

A: The investments that we make in debt, equity and other financial securities are exposed to different…

Q: which m

A: Given: To explain the considerations of companies choosing a marketable security to investing in an…

Q: What is the money market (include in your answer the characteristics of the money market and the…

A: Financial Market is a place/mechanism which facilitates exchange of financial assets between holders…

Q: How do disclosure requirements help limit excessive risk taking by banks

A: Basel norms: Basel norms are the norms which prescribes minimum capital which banks are required to…

Q: Explain commercial banks’ brokerage and intermediation functions. Clearly detail how these functions…

A: Commercial bank is defined as the place, where the individuals used to do banking. It makes the…

Q: ring and explain its advantages and disadvantages. Why might a bank be interested in a company’s…

A: Gearing : In simple words, gearing refers to the ratio of the company debt to equity. It depicts how…

Q: Describe how a bank ma

A: With their own securities trading account, a bank can get into proprietary trading. A Proprietary…

Q: What is the nature of an off-balance-sheet activity? How does a bank benefit from such activities?

A: Dear student, since you have posted two different questions at a time, only one question i e the…

Q: Why have off-balance-sheet activities been a growing source of bank profits and what are the…

A: Off-balance sheet is defined as an assets, debts, or the financing activities, which does not…

Q: why is money market necessary but not sufficient for the liquidity of securities on the stock market

A: Money market (MM) is a place where short term (ST) securities are traded. Generally, governments or…

Q: Secondary markets are markets used by corporations to raise cash by issuing securities like bonds…

A: The stock market is a financial marketplace where individuals and institutions buy and sell…

Q: b) Why is the risk-adjusted return on capital (RAROC) an important tool in credit risk management…

A: The risk-adjusted return on capital (RAROC) is an important tool in credit risk management for…

Q: Why is liquidity risk inherent to the business of banking? How can a bank seek to minimize its…

A: In  banking sector it is important to manage the liquidity because there is use of gas deposit of…

Q: Why do managers of financial institutions care so much about the activities of the Central Bank?

A: Financial institutions are intermediaries or mediators that facilitate the flow of funds between two…

Q: ratios recommended to manage liquidity risk for a

A: Step 1 The risk of insolvency can be reduced by monitoring and evaluating the financial system,…

Q: Why are banks currently holding capital well above the minimum regulatory requirement?

A: Capital is the main and important ingredient of banks, without capital , we cannot run a bank,…