- Consider the broadly defined “financial system” of chapters 01 and 02. As you address each letter item topic, you should include a url identifying an example. Your url should be different from one that is already posted in this discussion. Please do each of the following:
a. Explain what is meant by “Direct Finance” and what types of firms engage in this, give 2 examples.
b. Explain what is meant by “Indirect Finance” and what types of firms engage in this, give 2 examples.
c. Explain how the following things encourage the functioning of financial intermediaries:
i. Transaction Costs
ii. Risk Sharing
iii. Information Costs – be specific and include explicitly either moral hazard or adverse selection.