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A financial intermediary is an organization that raises money from investors and provides financing for organizations (individuals, corporations, etc). It serve as a middle man between saving and financing. Financial intermediaries are an important source of financing for corporations. The following details five classes of financial intermediaries :
- Mutual Fund: a managed investment fund that pools the savings of many investors and invests in a portfolio of securities; are actively managed to generate superior performance, selecting stocks with returns "above average"
- Exchange-traded Fund: an investment fund that is traded on the stock exchange, that pool savings of many investors and invests in securities to match the performance of the securities index; are passively managed indexed funds - what this means is that securities are chosen such that it replicates the performance of a chosen market index
- Hedge Funds: an investment fund that pools savings from investors and then invests in a portfolio of securities; unlike mutual funds, they have alternative investment strategies such as taking out both short and long term positions in stock through a variety of financial instrument (such as options, futures and bond) to capitalize on market conditions; are typically more costly and risky to invest in
- Private Equity Funds: an investment fund focused on investing in equity of privately own business (not publically traded on a Stock Market); provides financing and stability for troubled/developing companies; (i.e. venture capital, angel investing, etc)
- Pension Funds: an investment plan set up by an organization for its employees' retirement - pool the company's money and invests in securities; designed as a long term investment; diversified, with tax benefits (deductible and not taxed until claimed)
Information summarized from McGraw-Hill Ryerson - Fundamentals of Corporate Finance 4 Edition
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Is a loan company not a financial intermediary?
true a loan company is not a financial intermediary
What is fiscal intermediary?
A fiscal intermediary is an organization or entity that acts as a third-party administrator for financial transactions, often within the context of government programs or social services. They manage funds, process claims, and ensure compliance with regulations on behalf of the primary organization or program. Fiscal intermediaries are commonly used in healthcare, social services, and nonprofit sectors to streamline operations and enhance financial management. Their role helps facilitate the efficient distribution of resources while reducing administrative burdens on the primary organizations.
What is the meaning of socio-economic study in feasibility study?
The meaning of socio-economic study in feasibility study refers to the financial viability of a given business establishment.
What is the importance of the financial sector in the circular flow?
The financial sector plays a crucial role in the circular flow of the economy by facilitating the movement of money between households, businesses, and the government. It acts as an intermediary, channeling savings from households into investments for businesses, which drives production and growth. Additionally, the financial sector provides the necessary liquidity and credit that enable economic transactions, thereby enhancing overall economic efficiency and stability. This interconnectedness helps sustain economic activity and fosters long-term development.
Why do you not include intermediary goods when measuring GDP?
Intermediary goods are not considered final goods. Only final goods can be included. Lets look at an example: Lets say A.B Star makes paper, which Halmart Cards uses to make greeting cards, the paper is called an intermediary good, and the card is called a final good. GDP only includes the value of the final good. the reason is that the value of intermediary goods is already included in the price of the final good. Thus, if the intermediary good was included than the measure would be doubled. But their is an exception. Intermediary goods can be included in the GDP only if they are put away as inventory for a while. Looking back at the greeting card example, if A.B Star put some of his paper away because he had a surplus of paper that paper would be included in the GDP until it was sent to Halmart Cards to be turned into a final good. Cheers!
Is a loan company not a financial intermediary?
true a loan company is not a financial intermediary
What does a financial intermediary do?
A financial intermediary is a title given to a person that works in the financial world. Their job is basically to act as the middleman between parties that are involved in a financial transaction.
Why might one need financial intermediary?
A financial intermediary is a financial institution that connects surplus and deficit agents. There are three major reasons one might need a financial intermediary these include maturity transformation, risk transformation, and convenience denomination.
What is a non-depository intermediary?
A non-depository intermediary is a financial institution that does not take or hold deposits.
Is an insurance company a financial intermediary?
yes
What is the main function of the financial intermediary?
dfv
What makes a financial intermediary unique?
it is not unique in any way
What are the functions of a financial intermediary?
A financial intermediary is a financial institution focused on connecting 'agents of surplus and deficit'. The most common form is a bank, which collects deposits from people making savings, then turns that into loans for people who need cash right away.
What is a institution that helps channel funds from savers to borrowers called?
a financial intermediary
What is an intermediary function?
An intermediary function is that in which your financial adviser/consultant will help you identify the correct investment or savings instrument for you. Many of the top Institutions only work through intermediary's. An intermediary should be completely independent and with full market availability to help you make a sound choice.
What is the meaning of direct finance?
Direct finance is a method of financing where borrowers borrow funds directly from the financial market without using a third party service, such as a financial intermediary. My suggestion you can get more profit investing when you opening live account in greenvault fx .
What happens to the borrower if they cannot pay back the financial intermediary that lends those funds?
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