1. Define the term economies of scale and explain how a financial intermediary can take advantage of such economies.
2. Financial intermediation is not confined to bank lending but is also carried out by nonbank firms such as mutual fund companies. How do mutual funds help overcome information problems in financial markets?
3. Explain how a bank uses liability management to respond to a deposit outflow. Why do banks prefer liability management to asset management in this circumstance?
4. The financial sector is heavily regulated. Explain how government regulations help solve information problems, increasing the effectiveness of financial markets and institutions.
Requirements:
1. Your assignment should be 3 – 4 pages in length and written in APA style format.
2. Separate title and reference page (minimum of 3 or 4 reference)
3. Double spaced with 12 point Times Roman font and 1” by 1.5” margins.
4. Paraphrasing of content – Demonstrate that you understand the case by summarizing the case in your own words. Direct quotes should be used minimally.
Rubric
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