chap001金融机构习题解答.docx
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chap001金融机构习题解答.docx
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chap001金融机构习题解答
ChapterOne
WhyAreFinancialIntermediariesSpecial
ChapterOutline
Introduction
FinancialIntermediaries’Specialness
InformationCosts
LiquidityandPriceRisk
OtherSpecialServices
OtherAspectsofSpecialness
TheTransmissionofMonetaryPolicy
CreditAllocation
IntergenerationalWealthTransfersorTimeIntermediation
PaymentServices
DenominationIntermediation
SpecialnessandRegulation
*SafetyandSoundnessRegulation
*MonetaryPolicyRegulation
*CreditAllocationRegulation
*ConsumerProtectionRegulation
*InvestorProtectionRegulation
*EntryRegulation
TheChangingDynamicsofSpecialness
TrendsintheUnitedStates
FutureTrends
GlobalIssues
Summary
SolutionsforEnd-of-ChapterQuestionsandProblems:
ChapterOne
1.Identifyandbrieflyexplainthefiveriskscommontofinancialinstitutions.
Defaultorcreditriskofassets,interestrateriskcausedbymaturitymismatchesbetweenassetsandliabilities,liabilitywithdrawalorliquidityrisk,underwritingrisk,andoperatingcostrisks.
2.Explainhoweconomictransactionsbetweenhouseholdsaversoffundsandcorporateusersoffundswouldoccurinaworldwithoutfinancialintermediaries(FIs).
InaworldwithoutFIstheusersofcorporatefundsintheeconomywouldhavetoapproachdirectlythehouseholdsaversoffundsinordertosatisfytheirborrowingneeds.Thisprocesswouldbeextremelycostlybecauseoftheup-frontinformationcostsfacedbypotentiallenders.Costinefficiencieswouldarisewiththeidentificationofpotentialborrowers,thepoolingofsmallsavingsintoloansofsufficientsizetofinancecorporateactivities,andtheassessmentofriskandinvestmentopportunities.Moreover,lenderswouldhavetomonitortheactivitiesofborrowersovereachloan'slifespan.Thenetresultwouldbeanimperfectallocationofresourcesinaneconomy.
3.Identifyandexplainthreeeconomicdisincentivesthatprobablywoulddampentheflowoffundsbetweenhouseholdsaversoffundsandcorporateusersoffundsinaneconomicworldwithoutfinancialintermediaries.
Investorsgenerallyareaversetopurchasingsecuritiesdirectlybecauseof(a)monitoringcosts,(b)liquiditycosts,and(c)pricerisk.Monitoringtheactivitiesofborrowersrequiresextensivetime,expense,andexpertise.Asaresult,householdswouldprefertoleavethisactivitytoothers,andbydefinition,theresultinglackofmonitoringwouldincreasetheriskinessofinvestingincorporatedebtandequitymarkets.Thelong-termnatureofcorporateequityanddebtwouldlikelyeliminateatleastaportionofthosehouseholdswillingtolendmoney,asthepreferenceofmanyfornear-cashliquiditywoulddominatetheextrareturnswhichmaybeavailable.Third,thepriceriskoftransactionsonthesecondarymarketswouldincreasewithouttheinformationflowsandservicesgeneratedbyhighvolume.
4.IdentifyandexplainthetwofunctionsinwhichFIsmayspecializethatenablethesmoothflowoffundsfromhouseholdsaverstocorporateusers.
FIsserveasconduitsbetweenusersandsaversoffundsbyprovidingabrokeragefunctionandbyengagingintheassettransformationfunction.Thebrokeragefunctioncanbenefitbothsaversandusersoffundsandcanvaryaccordingtothefirm.FIsmayprovideonlytransactionservices,suchasdiscountbrokerages,ortheyalsomayofferadvisoryserviceswhichhelpreduceinformationcosts,suchasfull-linefirmslikeMerrillLynch.Theassettransformationfunctionisaccomplishedbyissuingtheirownsecurities,suchasdepositsandinsurancepoliciesthataremoreattractivetohouseholdsavers,andusingtheproceedstopurchasetheprimarysecuritiesofcorporations.Thus,FIstakeonthecostsassociatedwiththepurchaseofsecurities.
5.InwhatsensearethefinancialclaimsofFIsconsideredsecondarysecurities,whilethefinancialclaimsofcommercialcorporationsareconsideredprimarysecuritiesHowdoesthetransformationprocess,orintermediation,reducetherisk,oreconomicdisincentives,tothesavers
Thefundsraisedbythefinancialclaimsissuedbycommercialcorporationsareusedtoinvestinrealassets.Thesefinancialclaims,whichareconsideredprimarysecurities,arepurchasedbyFIswhosefinancialclaimsthereforeareconsideredsecondarysecurities.SaverswhoinvestinthefinancialclaimsofFIsareindirectlyinvestingintheprimarysecuritiesofcommercialcorporations.However,theinformationgatheringandevaluationexpenses,monitoringexpenses,liquiditycosts,andpriceriskofplacingtheinvestmentsdirectlywiththecommercialcorporationarereducedbecauseoftheefficienciesoftheFI.
6.Explainhowfinancialinstitutionsactasdelegatedmonitors.Whatsecondarybenefitsoftenaccruetotheentirefinancialsystembecauseofthismonitoringprocess
Byputtingexcessfundsintofinancialinstitutions,individualinvestorsgivetotheFIstheresponsibilityofdecidingwhoshouldreceivethemoneyandofensuringthatthemoneyisutilizedproperlybytheborrower.InthissensethedepositorshavedelegatedtheFItoactasamonitorontheirbehalf.TheFIcancollectinformationmoreefficientlythanindividualinvestors.Further,theFIcanutilizethisinformationtocreatenewproducts,suchascommercialloans,thatcontinuallyupdatetheinformationpool.Thismorefrequentmonitoringprocesssendsimportantinformationalsignalstootherparticipantsinthemarket,aprocessthatreducesinformationimperfectionandasymmetrybetweentheultimatesourcesandusersoffundsintheeconomy.
7.WhatarefivegeneralareasofFIspecialnessthatarecausedbyprovidingvariousservicestosectorsoftheeconomy
First,FIscollectandprocessinformationmoreefficientlythanindividualsavers.Second,FIsprovidesecondaryclaimstohouseholdsaverswhichoftenhavebetterliquiditycharacteristicsthanprimarysecuritiessuchasequitiesandbonds.Third,bydiversifyingtheassetbaseFIsprovidesecondarysecuritieswithlowerprice-riskconditionsthanprimarysecurities.Fourth,FIsprovideeconomiesofscaleintransactioncostsbecauseassetsarepurchasedinlargeramounts.Finally,FIsprovidematurityintermediationtotheeconomywhichallowstheintroductionofadditionaltypesofinvestmentcontracts,suchasmortgageloans,thatarefinancedwithshort-termdeposits.
8.HowdoFIssolvetheinformationandrelatedagencycostswhenhouseholdsaversinvestdirectlyinsecuritiesissuedbycorporationsWhatareagencycosts
Agencycostsoccurwhenownersormanagerstakeactionsthatarenotinthebestinterestsoftheequityinvestororlender.Thesecoststypicallyresultfromthefailuretoadequatelymonitortheactivitiesoftheborrower.Ifnootherlenderperformsthesetasks,thelenderissubjecttoagencycostsasthefirmmaynotsatisfythecovenantsinthelendingagreement.BecausetheFIinveststhefundsofmanysmallsavers,theFIhasagreaterincentivetocollectinformationandmonitortheactivitiesoftheborrower.
9.Whatoftenisthebenefittothelenders,borrowers,andfinancialmarketsingeneralofthesolutiontotheinformationproblemprovidedbythelargefinancialinstitutions
Onebenefittothesolutionprocessisthedevelopmentofnewsecondarysecuritiesthatallowevenfurtherimprovementsinthemonitoringprocess.Anexampleisthebankloanthatisrenewedmorequicklythanlong-termdebt.Therenewalprocessupdatesthefinancialandoperatinginformationofthefirmmorefrequently,therebyreducingtheneedforrestrictivebondcovenantsthatmaybedifficultandcostlytoimplement.
10.HowdoFIsalleviatetheproblemofliquidityriskfacedbyinvestorswhowishtoinvestinthesecuritiesofcorporations
Liquidityriskoccurswhensaversarenotabletoselltheirsecuritiesondemand.Commercialbanks,forexample,offerdepositsthatcanbewithdrawnatanytime.Yetthebanksmakelong-termloansorinvestinilliquidassetsbecausetheyareabletodiversifytheirportfoliosandbettermonitortheperformanceoffirmsthathaveborrowedorissuedsecurities.Thusindividualinvestorsareabletorealizethebenefitsofinvestinginprimaryassetswithoutacceptingtheliquidityriskofdirectinvestment.
11.HowdofinancialinstitutionshelpindividualsaversdiversifytheirportfoliorisksWhichtypeoffinancialinstitutionisbestabletoachievethisgoal
Moneyplacedinanyfinancialinstitutionwillresultinaclaimonamorediversifiedportfolio.Bankslendmoneytomanydifferenttypesofcorporate,consumer,andgovernmentcustomers,andinsurancecompanieshaveinvestmentsinmanydifferenttypesofassets.Investmentinamutualfundmaygeneratethegreatestdiversificationbenefitbecauseofthefund’sinvestmentinawidearrayofstocksandfixedincomesecurities.
12.Howcanfinancialinstitutionsinvestinhigh-riskassetswithfundingprovidedbylow-riskliabilitiesfromsavers
Diversificationofriskoccurswithinvestmentsinassetsthatarenotperfectlypositivelycorrelated.OneresultofextensivediversificationisthattheaverageriskoftheassetbaseofanFIwillbelessthantheaverageriskoftheindividualassetsinwhichithasinvested.Thusindividualinvestorsrealizesomeofthereturnsofhigh-riskassetswithoutacceptingthecorrespondingriskcharacteristics.
13.Howcanindividualsaversusefinancialinstitutionstoreducethetransactioncostsofinvestinginfinancialassets
Bypoolingtheassetsofmanysmallinvestors,FIscangaineconomiesofscaleintransactioncosts.ThisbenefitoccurswhethertheFIislendingtoacorporateorretailcustomer,orpurchasingassetsinthemoneyandcapitalmarkets.Ineithercase,operatingactivit
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- chap001 金融机构 习题 解答