Financial System Flashcards
0
Q
Life cycle of financial instrument
A
Issue instrument: brings funds to issuer
Payment of income by issuers to investor
Transfer of instrument to other investor
Redemption of instrument
1
Q
Roles of financial system
A
Provide a payment mechanism
Channel fund from SSU to DSU
Promote economic efficiency
Reduce risk
2
Q
Broker
A
Helps ultimate lender
3
Q
Dealer
A
Makes transaction with each side
4
Q
Benefits of financial intermediation
A
Economies of scale
Credit risk diversification
Liquidity
Overcome information asymmetries
