Question

In 1860s, there was no existence of financial markets and institutions in the economy. However, investing...

In 1860s, there was no existence of financial markets and institutions in the economy. However, investing activities were still performed in the economy. If you were an investor back then, what sort of risks would have been associated with your investments?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

In the absence of financial markets and institutions, the main risk which investors would have faced would have been default risk and liquidity risk. Financial markets provide a common platform for all buyers and sellers so the risk of not being able to find buyers or sellers is minimized (liquidity risk). Additionally, financial markets and institutions act as crucial intermediaries so that strangers can transact without the risk of the other party defaulting or defrauding one.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Conduct an online research into Australian economy and discuss your views about investing in Australian projects...
Conduct an online research into Australian economy and discuss your views about investing in Australian projects as if you were an overseas investor. Would you consider investing in Australia and why?
The recent collapse of some banks and financial institutions and the merger of others in ghana...
The recent collapse of some banks and financial institutions and the merger of others in ghana is proof that the financial system which consists of institutional units and markets that interact, typically in a complex manner, for the purpose of mobilizing funds for investment and providing facilities, including payment systems, for the financing of commercial activity remains unprotected in spite of the the presence of the Regulator and a solid legal system backing it. From the discussion in class and...
The recent collapse of some banks and financial institutions and the merger of others in Ghana...
The recent collapse of some banks and financial institutions and the merger of others in Ghana is proof that the financial system which consists of institutional units and markets that interact, typically in a complex manner, for the purpose of mobilizing funds for investment and providing facilities, including payment systems, for the financing of commercial activity remains unprotected in spite of the the presence of the Regulator and a solid legal system backing it. From the discussion in class and...
1. Discuss why financial markets are important to a healthy economy and how they contribute to...
1. Discuss why financial markets are important to a healthy economy and how they contribute to economic growth. 2. Assume that you recently graduated with a degree in finance and have just reported to work as an investment adviser at the brokerage firm of Smyth Barry & Co. Your first assignment is to explain the nature of the U.S. financial markets to Michelle Varga, a professional tennis player who recently came to the United States from Mexico. Varga is a...
You are thinking of potentially investing in one firm in Calgary right now. Business seems to...
You are thinking of potentially investing in one firm in Calgary right now. Business seems to have performed well for the past 2 years however covid 19 is on the horizon and right now you are thinking this is a good time to invest in the business of your dreams. Please tell me in your words what would you do to ensure that business becomes successful and survives during the pandemic.. (select the business of your choice , what tools...
Financial regulations are rules created and imposed by the government on financial institutions, such as banks....
Financial regulations are rules created and imposed by the government on financial institutions, such as banks. The objective of financial regulations is to prevent the abuse of financial services to customers, to protect the savings of the public, and to keep the financial economy stabilized (Rose, Hudgins 2008 p. 31). It is accurate to state that the impact of past financial crises has established and contributed to the amelioration of financial regulation over the decades. In 1929 when the Great...
Please discuss the following in full answer: the financial environment and investing: If you were going...
Please discuss the following in full answer: the financial environment and investing: If you were going to invest money, given the current financial market status, where would you invest your money today? What are some possible investment choices for you as an individual? What factors influence your decision on what to invest in? How does the economic climate affect what you invest in?
2) If time has value, why are financial institutions often willing to extend you a 30-year...
2) If time has value, why are financial institutions often willing to extend you a 30-year mortgage at a lower annual interest rate than they would charge for a one-year loan? a) With a mortgage, the house you purchase acts as collateral for the loan. This reduces the risk associated with the loan and so reduces the compensation the bank requires. b) Because time has value, banks charge a lower interest rate on mortgages because they receive repayments for 30...
You are considering investing in a firm that is in financial distress. While the assets are...
You are considering investing in a firm that is in financial distress. While the assets are valued at $25 million, the face value of its debt is $38 million (i.e.: it owes more than the value of its assets). Regular valuation techniques would indicate that the value of equity for this firm is zero (as it can't be negative). However, you want to apply Real Option Valuation to see if it's worth investing. The standard deviation of the firm asset's...
Topic: Open Market Supply SHANGHAI -- Money markets are often described as the financial system's plumbing....
Topic: Open Market Supply SHANGHAI -- Money markets are often described as the financial system's plumbing. When they work, which is most of the time, hardly anyone notices, but when they get blocked up, it creates quite a stink. That is why China's money market -- in which banks and other financial institutions borrowed some $6.4 trillion from each other last month alone to fund their daily needs -- is becoming one of the world's most important markets to watch....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT