More liquid investment than a capital market security

Assignment Help Financial Management
Reference no: EM131442512

Financial intermediaries (FIs) can offer savers a safer, more liquid investment than a capital market security, even though the intermediary invests in risky illiquid instruments because

FIs can diversify away some of their risk.

FIs closely monitor the riskiness of their assets.

the federal government requires them to do so.

FIs can diversify away some of their risk and closely monitor the riskiness of their assets.

FIs can diversify away some of their risk and the federal government requires them to do so.

Reference no: EM131442512

Questions Cloud

Liquidity risk at a financial intermediary is the risk : Liquidity risk at a financial intermediary (FI) is the risk
Which common core standard or early learning standard : ECE 430- Identify which Common Core Standard or Early Learning Standard you will address and which National Association for the Education of Young Children standard is being covered (in the Standards section of the template).
Determine the cost of equity after the debt issuance : Assume a firm’s cost of capital with zero debt is 0.15 and the cost of debt is 0.08. The value of the unlevered firm is Vu = (150,000/0.15)= $1,000,000.  Determine the value of the firm (no cost of financial distress and no investor taxes). The corpo..
Develop a model to predict the salary : Develop a model to predict the salary based on (Gender, Age, Performance Rating, and Degree). State the multiple regression equation. Interpret the meaning of the slopes in this equation.
More liquid investment than a capital market security : Financial intermediaries (FIs) can offer savers a safer, more liquid investment than a capital market security, even though the intermediary invests in risky illiquid instruments because
Competitive environment analysis : Competitive Environment Analysis. Who are Polaris’ direct competitors? What are the key success factors needed to compete in this industry? Primary competitor’s goals and strategy. What is the depth and breadth of competitor’s product line?
Compare the difference between a male and female manager : Analyze what you consider to be the four characteristics of an effective manager or leader in the workplace. Consider characteristics such as honesty, integrity, or people skills. Should managers and leaders perform the same task?
How to maintain an online booking system : How to maintain an online booking system?
Overall trend assessment of the company balance sheet : Overall trend assessment of the company’s balance sheet, income statement, and statement of cash flows for the last three years. Selected ratio and trend analysis. Ratios must include liquidity, asset management, solvency, profitability, and market v..

Reviews

Write a Review

Financial Management Questions & Answers

  Should you buy the given debentures

The debentures are callable two years from now at $1,090. If you require a 20 percent rate of return on investments of this perceived risk level, should you buy these debentures?

  Analyzing cost data discovered that the information

An engineer analyzing cost data discovered that the information for the first three years was missing. However, she knows that the cost in year four was $1250 and the cost continued to increase by 5% per year thereafter.

  What are the arithmetic and geometric returns for the stock

A stock has had returns of −19.1 percent, 29.1 percent, 25.2 percent, −10.2 percent, 34.9 percent, and 27.1 percent over the last six years. What are the arithmetic and geometric returns for the stock?

  Government bond makes annual coupon payments

A six-year government bond makes annual coupon payments of 5% and offers a yield of 3% annually compounded. Suppose that one year later the bond yields 2% at the end of the year. What return would the bondholder earn in this case?

  Overall cost of debt is weighted average of that implied

Vedder, Inc., has 6.1 million shares of common stock outstanding. The current share price is $61.10, and the book value per share is $4.10. Vedder also has two bond issues outstanding. Assume that the overall cost of debt is the weighted average of t..

  How many years do these bonds have until they mature

The Great Lakes Co. has 12 percent coupon bonds making annual payments with a YTM of 9 percent. The current yield on these bonds is 9.8 percent. How many years do these bonds have until they mature?

  Fluctuation in inflation can occur in the short or long term

Fluctuation in inflation can occur in the short or long term. For example, rice levels can increase and decrease on a month to month arsis and we can also evaluate inflation rates over time. Therefore, while it may be hard to redict the economic chan..

  Junior interiors market value capital structure

Junior Interiors market value capital structure of 62% Common Equity, 3% Preferred Stock (PS) and 35% Debt. The company does not pay dividends, and evaluates its operations as approximately 30% more risky than an “average” company in the industry. Wh..

  What is the value added by buying a share

Oriental is expected to pay an annual dividend of $2 per share forever. Investors require a return of 12% per year to compensate for the risk of not receiving the expected dividends. The firm’s share trade for $19 each. What is the value added by buy..

  How fast can sales grow before any fixed assets are needed

Southern Mfg., Inc., is currently operating at only 86 percent of fixed asset capacity. Current sales are $620,000. How fast can sales grow before any new fixed assets are needed?

  Developing proposal to open three new mexican restaurants

You are developing a proposal to open three new mexican restaurants around the metro detroit area over the next four years. The Project requires a purchase of $800,000 of equipment with a four year useful life and a book value of zero at the end of t..

  Calculate the current required return to equity

Speedy Auto Parts is considering a merger with Freeman Car Parts. Freeman's market-determined beta is 0.9, and the firm currently is financed with 20% debt, at an interest rate of 8%, and its tax rate is 25%. Calculate the current required return to ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd