Fin 6246 - Study guides, Class notes & Summaries

Chapter 7 indirect financeuses intermediaries direct financestraight through process 8 facts about the financial system1.) stocks are not the most important source of external financing for businesses 2.) issuing marketable securities (stocks and bonds) is not the primary way in which businesses finance their operations 3.) indirect finance is more important than direct finance in terms of providing funds for businesses 4.) financial intermediaries are the most important source of fu...

Asymmetric information leads to moral hazard and adverse selection A major motivator for regulation in the financial industry is to reduce these costs of asymmetric information Bank Panics and the need for deposit insurance -Prior to FDIC insurance, depositors lost money when banks failed -The inability of depositors to assess the quality of a bank's assets can lead to panics -Prior to the Great Depression, bank panics were a regular occurrence in the US -Bank panics would occur roughly...

FIN 6246: MSF – Fall 2018 Final Review Questions