1 Illustrate the
flow of funds between primary investors and ultimate borrowers in a modern
economy. Give examples of intermediary activity.
2 List as many
financial intermediaries as you can. Describe the nature of their
intermediation and explain the intermediate securities they create.
3 What is the
4 What is the
contractual theory? Do you regard it as a strong argument?
5 What difficulties
might arise in state-owned industries in making financial decisions?
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