2a) Self-regulation, regulation by the government and regulation by a governmental agency are three approaches to the regulation of financial markets. Discuss and explain their differences.
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2a) Self-regulation, regulation by the government and regulation by a governmental agency are three approaches to the regulation of financial markets. Discuss and explain their differences.
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- (b) Discuss the roles of financial intermediaries in solving adverse selection and moral hazard.Support your answers with real-life business examples.a) How do financial institutions benefit the overall economy? b) How do Fls reduce monitoring costs associated with the flow of funds from fund suppliers to fund investors? c) What is the Basel Agreement?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…
- Explain what is the function of the following components in a country's financial system. regulators, commercial banks, investment banks and non-banking intermediaries1) The interest rate earned on a money market deposit account is generally higher than the interest earned on a Bank savings account. 2) What are short-term notes of debt issued by the federal government commonly called? A) T-Bills B) T-Notes C) T-Bonds D) T-Accounts E) None of the above are correct. 3) What is the name for comprehensive financial services packages offered by brokerage firms? A) asset management accounts B) comprehensive management accounts C) platinum management accounts D) consolidated management accounts E) None of the above are correct. 4) Money market mutual funds provide an alternative to traditional liquid investments offered by financial institutions. Advantages of MMMFs include which of the following? A) high interest rates B) check-writing privileges C) minimal risk D) convenience--deposits made through payroll deductions E) All of the above are correct. 5) A savings alternative that pays a fixed rate…explain the functions performed by financial intermediaries and how they can promote economic efficiency in financial markets.
- The following are the common characteristics of financial intermediaries, except: *a. Providers of loans.b. Maintains stability in the capital market.c. Making the investors rich.d. Providing investment adviceQUESTION 2 Provide a detailed analysis of the impact of informational asymmetries on financial markets and the main remedies enacted by financial institutions to alleviate such problems.What is the main purpose of financial regulation? What kind of instruments may a government use to protect the economy and country from financial panic?
- Identify several different types of financial institutions, and describe the main services these institutions offerQ1: Define and differentiate between: a) Organized exchanges and Over the counter markets b) Open Ended vs Closed Ended Mutual Funds c) Moral Hazard and Adverse selection Q2: What is meant by asset transformation and how is it the basis for differentiating between indirect finance and direct finance? Q3: What are the three main reasons for regulating financial markets and institutions? Also list the major regulation examples under each of the three reasons. Q4: What value do mutual funds add for individual investors and how? Q5: Using the relevant financial securities and institutions, explain the chain of events which lead to the 2007 global financial crisis. Q6: Last year Fauji Fertilizer Company Limited (FFCL) gave an annual dividend per share of Rs. 8.85 which is expected to grow at 5%, forever. Calculate the per share price of the stock if its required rate of return is 14%? Q7: Calculate the duration of a 7-year coupon bond having a 11% coupon rate. The current market…Explain the reasons for the emergence of financial crises in the world and what measures were taken to overcome the crisis.