+1-415-670-9189
info@expertsmind.com
Explain concept of financial intermediation
Course:- Financial Management
Reference No.:- EM13160905




Assignment Help
Assignment Help >> Financial Management

1. Explain concept of financial intermediation. How does the possibility of financial intermediation increase the efficiency of the financial systems?
2. Why is denomination divisibility an important intermediation service to the typical household?

3. Why are economies of scale important to the viability and profitability of financial intermediaries?

4. Explain the differences between the money markets and the capital markets. Which market would General Motors use to finance a new vehicle assembly plant? Why?

5. What is the prime rate? Why do some banks make loans below the prime rate?

6. What do we mean by "off-balance-sheet" activities? If these things are not on the balance sheet, are they important? What are some off-balance-sheet activities?

Answered:-

Verified Expert


Preview Container content

Financial intermediary is a medium to connect the two parties in a financial transaction. Prominent examples of financial intermediary are Banks, insurance companies, Mutual funds, pension funds etc. When one person doesn’t want or doesn’t have the option to transact with another individual directly then he executes the transaction with help of intermediary.

For example if A wants to borrow money but he could not find anybody to lend him then he can borrow money from Bank. Bank is an intermediary who takes the money from those who want to deposit and lend to those who want to borrow without connectine each other individually. Financial intermediation is very much essential for efficient of financial system. It gives liquidity and assurance.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
A large automobile manufacturer has developed a continuous variable transmission (CVT) that provides smooth shifting and enhances fuel efficiency by 2 mpg of gasoline. what is
A 20 year bond with an annual coupon of 10% has a duration of 10 years and a convexity of 136. The YTM of the bond decreases from 8% to 7%. What is the actual percent change i
A car is financed as follows: $2,000 as down payment plus equal monthly payments at 8% annual interest rate compounded monthly for 3 years. Original price of the car was $12,5
The price of a bond with 4% annual coupon and $100 face value in year T is $90. Is the yield to maturity greater than, the same, or less than to the annual coupon rate? Explai
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 28,900 1 12,900 2 15,900 3 11,90
A fast-growing firm recently paid a dividend of $0.25 per share. The dividend is expected to increase at a 30 percent rate for the next three years. Afterwards, a more stable
Portfolio Beta Your retirement fund consists of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 1.25. Suppose you sell one of the stocks wit
You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $350 pe