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24 Feb 2019

List the different categories/types for the following:

Financial markets.

Financial institutions.

Financial instruments.

Regulation of financial markets.

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Deanna Hettinger
Deanna HettingerLv2
25 Feb 2019

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Related questions

the role of financial institutions in financial markets

part 1

1. Why are bond markets important?

2. Why are stock markets important?

3. Why are banks important?

4. What aspects of the economy are affected by the money supply?

5. What are the four phases of a business cycle? How does money supply affect business

cycles?

6. What is the relationship between money supply growth and inflation?

7. What is monetary policy? What is fiscal policy?

8. What is the foreign exchange market?

9. How does an appreciation of a currency affect the economy?

10. How does a depreciation of a currency affect an economy?

part 2

1. What are the two components of a financial system? What is direct finance? Indirect

finance?

2. What is the role of financial markets?

3. Explain the following classifications of financial markets

a. Debt and. equity markets

b. Primary and secondary markets

c. Exchanges and over-the-counter markets

d. Money and capital markets

4. List and briefly explain each money market instrument.

5. List the capital market instruments.

6. Explain why financial intermediaries play an important role in the economy (address the

following: transactions costs, risk sharing, information costs, and economies of scope).

7. What is asymmetric information? What are the two problems that arise when there is

asymmetric information in the financial system?

8. Explain the adverse selection and moral hazard problems that are a result of asymmetric

information.

9. What are the different types of financial intermediaries in the U.S. economy?

10. Which financial intermediaries are classified as depository institutions (or banks)?

11. What are the two main reasons why the government regulates the financial system?

12. What are the different types of financial regulations implemented by the government in

the U.S.?


4-7 It has been determined that, in aggregate, financial institutions with depository accounts currently hold excess reserves equal to $3 billion that is, they hold $3 billion more than is necessary to meet the reserve requirements associated with existing deposits. The reserve requirement applicable to all deposits is 15 percent. Assume that changes in reserves held by financial institutions affect deposits only ( that is, amount lent out are always redeposited in the financial institutions.)

a. All else being equal, what would be the effect on deposits if financial institutions immediately eliminated all of their excess reserves ?

b. All else being equal, what would be the effect on deposits if financial institutions adjusted their reserves so that excess reserves decreased to $1.2 billion ?

c. Describe the effects that either of the above actions would have on interest rates in the financial markets.

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