Point counter point
Question 3: Imperfect Markets Distinguish between perfect and
imperfect security markets. Explain why the existence of
imperfect markets creates a need for financial intermediaries.
With perfect financial markets, all information about any securities for sale
would be freely available to investors, information about surplus and
deficit units would be freely available, and all securities could be
unbundled into any size desired. In reality, markets are imperfect, so that
surplus and deficit units do not have free access to information, and
securities cannot be unbundled as desired.
Financial intermediaries are needed to facilitate the exchange of funds
between surplus and deficit units. They have the information to provide
this service and can even repackage deposits to provide the amount of
funds that borrowers desire.
Question 24: Some countries do not have well-established
markets for debt securities or equity securities. Why do you think
this can limit the development of the country, business
expansion, and growth in national income in these countries?
Non well-established markets for debt securities or securities meaning
firms cannot raise funds to do the expansion because companies count on
market to become bigger. If a country’s local market is not designed well,
investors who has a lot of money will not believe and have intention to
invest to other developed markets. Thus, it will help the other nations
grow rather than their own country -> No or small changes in I cannot
make the GDP grows significant
FOF
a.
