Smaller firms tend to rely more on financial intermediaries to obtain funds externally due to high transaction costs and information costs. A. True B. False
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- What do the authors mean when they state that financial intermediaries can achieve economies of scale with respect to transaction costs? A. Intermediaries can spread transaction costs across larger transaction volumes, so the cost per unit is lower. B. Intermediaries tend to specialize in certain types of transactions, so their costs are lower because they operate at lower volume than other types of financial firms.Because financial intermediaries operate on a big scale, this relates to minimizing the costs of transactions incurred by them. *a. Economies of Scopeb. Economies of Scalec. Economic Convenienced. Economies of Costse. None of the choices.What are the legislation and regulatory changes thathave driven the changes in the services of the financialinstitutions?
- lling MOST of the financial funds in USA. The following are true general statements about Financial Instruments and Trading Markets, EXCEPT: Stocks are considered more risky type of investmet than Bonds. O Stock holders are residual claimants. Stocks are only traded in the Primary Markets. In the Secondary Markets securities are continuously resold.Which type of financial intermediary provides individual investors with professional management of their money and diversification in order to limit the risk of investing? A. mutual funds B. insurance companies C. hedge funds D. investment banksIn what way might consumer protection regulationsnegatively affect a financial intermediary’s profits?Can you think of a positive effect of such regulationson profits?
- What are the transaction costs problems facing financialorganizations? Explain how financial intermediaries canhelp reduce these problems.Please discuss four factors that can cause financial intermediation to fail.Which statement is incorrect related to financial intermediaries (institutions)? a. They are firms that specialize in financial intermediation - a process of borrowing funds from SSUs and lending such funds to the DSUs. b. The main objective of financial intermediaries is to convert savings from SSUs into investments. c. They are the biggest investors in equity securities in the PSE d. They offer the highest returns and lowest risks when compared to alternative investments available to SSUs. e. none of the above
- Which of the following is the MOST liquid of the assets? a.M1 b.Cryptocurrencies c.M2 d.Mutual funds e.Stocks and bonds7. What economic functions do financial intermediaries perform?4. Which of the following is most likely a financial security? a. Foreign currency O b. Insurance plan c. Commodities d. Preferred share O e. None of the above