Determine the two ways that banking system helps to improve the allocation of saving.

Question

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Answer 1

Question

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

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Students have asked these similar questions

Which of the following is true about banks? Select one: a. The interest rate banks charge when they lend is the same they pay for the deposits they receive. b. Banks are financial institutions through which savers can directly provide funds to borrowers. c. Typically, banks receive few but big deposits, which they then use to make many small loans. d. Through the checking accounts they facilitate, banks provide a medium of exchange.

You are been asked by your younger sister to explain what banking is, write brief description of the activities of a bank explaining how they generate income.

What are the reasons that young people might decide not to open a bank account?

Answer 2

Question

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

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Answer 4

Question

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

Answer 6

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

Answer 7

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Answer 8

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.