Answrs to Questions_C08.ppt

Chapter 8 An Economic Analysis of Financial Structure Answers to End-of-Chapter Questions 本章末复习题参考答案 Answers to End-of-Chapter Questions本章末问题参考答案 1. Financial intermediaries can take advantage of economies of scale and thus lower transactions costs. For example, mutual funds take advantage of lower commissions because the scale of their purchases is higher than for an individual, while banks’ large scale allows them to keep legal and computing costs per transaction low. Economies of scale which help financial intermediaries lower transactions costs explains why financial intermediaries exist and are so important to the economy. Answers to End-of-Chapter Questions本章末问题参考答案 *2. Financial intermediaries develop expertise in such areas as computer technology so that they can inexpensively provide liquidity services such as checking accounts that lower transactions costs for depositors. Financial intermediaries can also take advantage of economies of scale and engage in large transactions that have a lower cost per dollar of transaction. Answers to End-of-Chapter Questions本章末问题参考答案 3. No. If the lender knows as much about the borrower as the borrower does, then the lender is able to screen out the good from the bad credit risks and so adverse selection will not be a problem. Similarly, if the lender knows what the borrower is up to, then moral hazard will not be a problem because the lender can easily stop the borrower from engaging in moral hazard. Answers to End-of-Chapter Questions本章末问题参考答案 * 4. Standard accounting principles make profit verification easier, thereby reducing adverse selection and moral hazard problems in financial markets, hence making them operate better. Standard accounting principles make it easier for investors to screen out good firms from bad firms, thereby reducing the adverse selection problem in financial markets. In addition, they make it harder for mangers to understate profits, thereby reducing the principal-agent (moral hazar