Functions and Examples of Financial Intermediaries...

If you have a risky investment.You might want to protect yourself against the risk of default.It's easier to get insurance from an insurance company that can help spread the risk of default than it is to try to find a particular individual.

A financial adviser does not lend or borrow for you.They can give advice on your behalf.It allows you to spend more time looking for the best investment and less time understanding the financial markets.

Credit unions provide facilities for lending and depositing within a community.

These are investment schemes.A bigger investment fund can be created by pooling the small savings of individual investors.Small investors can benefit from being part of a larger trust.Small investors can benefit from smaller commission rates for big purchases.

Commercial banks are not involved in the savings-investment process.This is the biggest mistake in human history.

New types of accounts, such as money market mutual funds issued by investment companies and securities firms that were not subject to federal interest rate regulation, gave commercial banks stiff competition for funds.

According to a March 15, 1981 letter from the American Bankers Association, depository institutions have lost an estimated $100b in potential consumer deposits alone to the unregulated money market mutual funds.The deregulation of interest rates would allow the banks to increase their rates even more because they would compete against each other for the same amount of deposits.

The movie "Wall Street" was written by Louis Stone and was dedicated to Vice President Shearson.

Which of the two life insurance companies is more appropriate to be called a financial intermediary?Both qualify with no significant differences.

The Reserve and commercial banks are inflationary.Non-inflationary lending is done by the nonbanks.If savings are not activated quickly, there will be a negative economic impact.The only source of the secular stagnation thesis since 1981 is this one.

An increase in infinite money products has a negative economic effect.An increase in frozen finite savings products increases the real rate of interest and has a positive economic multiplier.

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