ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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make it easier for customers to conduct transactions.
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allow customers to have a cup of coffee while waiting in the lobby.
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are a result of the asymmetric information problem.
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are another term for asset transformation.
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Detailed explanation-1: -The liquidity services are provided by the financial intermediaries to their customers to convert their money into assets and vice versa, i.e., assets back into money based on professional advice. Also, the credit facilities provided by the financial intermediaries to facilitate the expansion of business.
Detailed explanation-2: -Which of the following financial intermediaries is most likely to provide liquidity service to its clients? Brokers, Dealers, or Exchanges? Dealers-liquidity is the ability to buy or sell with low transaction costs when investors want to trade. By allowing traders to trade when they want, dealers provide liquidity.
Detailed explanation-3: -These intermediaries help create efficient markets and lower the cost of doing business. Intermediaries can provide leasing or factoring services, but do not accept deposits from the public. Financial intermediaries offer the benefit of pooling risk, reducing cost, and providing economies of scale, among others.
Detailed explanation-4: -An economy with financial intermediaries is able to economise on liquidity insurance and therefore is able to devote more of its savings to higher return illiquid assets. This, in turn, increases the steady-state growth rate of the economy.