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What is the basic function of financial intermediaries is to obtain funds from surplus units?
Wiki User
∙ 12y ago
Channels Funds: The financial intermediary provides a place where surplus units can deposit their
excess funds with confidence. The financial intermediaries have expert knowledge that ensures that
transaction costs of such trade are minimised. Because the financial intermediaries receive deposits
from a large customer base they can aggregate these savings and make them available to suitable
deficit units as required.
Maturity transformation: Many deficit units want to borrow for a long period of time whereas many
surplus units don't want to tie up their money for such a long period of time. Financial intermediaries
accept deposits daily so if someone wants to borrow for 10 years they can do so, whereas the surplus
units don't have to deposit for the 10 years. Because of the daily business of accepting funds, there is a
rolling over of new deposits so that there are sufficient funds to enable surplus units to withdraw their
funds as they wish. Maturity transformation is the ability to turn short-term deposits into longer term
loans.
Risk Transformation: Where a surplus unit may be unwilling to lend their money for fear of default, a
financial intermediary can spread such risk by virtue of the diversity of the spectrum of its activities.
By having a large number of borrowers, all screened, any defaults which may occur can be absorbed by
the return on all the successful loans
Wiki User
∙ 12y ago
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Why are Financial intermediarys important to the economy?
financial intermediary is one of the participants in the financial market. the other two are fund's providers and fund's users. financial intermediaries are important because they are institution that bring lenders and borrower together. savers with excess funds will deposits funds with financial intermediaries who will then lend them to fund deficit units. examples include commercial banks, insurance companies, and investment companies. thus, financial intermediaries can be regarded both as a provider and as a user of funds. apart from bringing fund-deficit and fund-surplus together, another function provided by financial intermediaries is investment banking. frequently, companies may need to obtain large amounts of funds direct from the public. this involve issues of securities, either in the form of debt or equity. the service of the merchant banker is required for this purpose. the banker is directly involved in floating new securities to the public besides providing advice and underwriting services. when a banker underwrites an issues, it means that any shares not bought by investors will be bought by the banker. the underwriting function ensures that the corporation receives the total amount of funds it want to raise.
The financial function of the business gives a chance to to''look before you leat'' Discuss ways in which small business in Uganda can obtain funds for their activities?
The financial function of the business gives a chance to "look before you leat". Discuss ways in which small business in Uganda can obtain funds for their activities?
From where do farmers obtain the inputs that they require?
farmers obtain their inputs from the markets with their surplus income.
What is the easiest way to calculate mortgage payments?
Go to the bank or get a calculator. A home buyer or builder can obtain financing (a loan) either to purchase or secure against the property from a financial institution, such as a bank, either directly or indirectly through intermediaries.
What is needed to obtain financial planner certification?
If one wanted to become a financial planner, one must obtain the proper certification needed. One would need to obtain the Certified Financial Planner (CFP) designation.
Where can one obtain a financial planning certificate?
One can obtain a financial planning certificate by going to the Get CFP Certified website. The website has tools that allow people to become certified in financial planning.
Where can one obtain a personal financial service online?
One can obtain a personal financial service from various websites like HumanServices and Woolworths. Both websites offer a great amount of financial services, including a person financial service.
What is the definition of a mortgage loan and how does it work What are the advantages/disadvantages of such loan?
mortagage loan is the loan issued against the real property through the documents. home buyer or builder can obtain financing (a loan) either to purchase or secure against the property from a financial institution, such as a bank, either directly or indirectly through intermediaries.
What degree does one obtain when finishing their financial planning studies?
The degree you obtain when finishing your financial planning studies is an MBA in Financial Planning. You can find more information on how to earn a degree online at the Callutheran Website.
What is function of moss's rhizoid?
To obtain water.
What is the function of moss's rhizomes?
to obtain water
What is the function of moss rhizoid?
To obtain water.
