MindTap- Cengage https://ng.cengage.com/static/nb/ui/evo/index.html?elSBN-978133

Question

MindTap- Cengage https://ng.cengage.com/static/nb/ui/evo/index.html?elSBN-97813379158548id-3739767818snapshotld-94705 -) fia MIN TAP Chapter 3 Assignment 2. The transter of capital between savers and lenders the former will have to draw down their savings Some people spend more than their cument incomes, while others spend less. To finance their spending· ds. The latter have the opportunity to save and thereby increase their spending capability in the future dick on the blank lines and choose the answer that best completes each sentence Read the following paragraph. Then, of individuals and institutions, instruments and procedures that bring together borrowers and savers and the standard of living in the economies that employ facitate the flow of capital between them. The e distence of these entitiest them. They allow individuals, businesses, and governmental units to transfer income between time funds to those with perlods and from those with of three forms. In the following table, correctly identily the methods of transfer being described Fnancial transfers of capical generay take one Transfer through an Investment Transfer through a Financial Intermediary Transfer Scenario additionall Two years apo, elake started a new business, Now he needs additional capital to finance growth and is meeting with a group of angel' Investors. If they decide to make the loan, they will do so directly, without the use of a middieman or other intermediary. Sanger Machine Company would lae to borrow adsitional dest capital. The firms has hired a fimto assist in the sale of a new issue of 10-year bonds ignterrey Metalmorks, Inc. holds cash balances in an instl O Type here to search up

Explanation / Answer

Transfer of capital between savers and lenders

Answers

Sanger machines acquiring funds by issuing bonds through a firm – Transfer through Investment Banking House

Monterry metalwork’s - Transfer through Financial Intermediary

Explanation

Financial markets is a System composed of individuals, institutions, instruments, and procedures to bring together borrowers and savers thus helping in transfer of funds. They facilitate funds transfer from individuals and business that have a surplus to individuals, businesses as well as governments that needs funds (in addition to incomes). These financial markets help in improving the standard of living in an economy

They help to transfer income between time periods (from adulthood to old age) and from those with surplus to those with needs via three processes

1.) Direct Transfer of money

This occurs when business sells stocks and bonds to acquire money directly from savers (investors) without using any intermediary or financial institution.

Blake acquires funds directly from angel investors without using any intermediary

2.) Investment Banking House

The investment banking house, acts as the middleman to facilitates the issuance of securities by firms/governments and raise funds

Here the security is with the fund provider –e.g. investor buying a firm’s bonds through an investment bank holds the security- bonds

Sanger machine acquires funds by issuing bonds to investors. Here the bonds are issued and transferred through an intermediary, not directly

3.) Financial Intermediary

Here an intermediary like bank acquires funds from savers. Then it lends the money to purchase another company's securities. Individuals also use financial intermediaries to acquire funds through loans .Ex. a bank or mutual fund.

Here the security is with the intermediary. When someone buys a loan from a bank, the security such as land collateral is with the bank.

Monterry metalwork’s holds cash in an institution. The institution uses this cash to lend out loans .

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---