Ch. 8- personnal

Question 1

What is the function of financial market.

Answer 1

Chanels funds from those who have a surplus of money to those who have a shortage

Lenders: Have a surplus
Borrowers: Have a shortage

Question 2

What is the difference between direct and indirect financing

Answer 2

Direct: borrowers borrow the funds directly from the lenders by selling them securities.

Indirect: Financial intermediaries borrow the funds and then lend them to borrowers