Question: The island of Utopia has a very unusual economy Everyone
The island of Utopia has a very unusual economy. Everyone on Utopia knows everyone else and knows all about the firms they own and operate. The financial system is well developed on Utopia. Everything else being equal, how would you expect the mix on Utopia between internal finance (where companies use their own funds such as retained earnings) and external funding (where companies obtain funds through financial markets) to compare with other countries? What role would financial intermediaries play in this economy?
Answer to relevant QuestionsYou and a friend visit the headquarters of a company and are awestruck by the expensive artwork and designer furniture that graces every office. Your friend is very impressed and encourages you to consider buying stock in ...Consider a small company run by a manager who is also the owner. If this company borrows funds, why might a moral hazard problem still exist? Based on the information provided below about banks A and B, compute for each bank its return on assets (ROA), return on equity (ROE) and leverage ratio. a. Bank A has net profit after taxes of $1.8 million and the balance ...Bank Y and Bank Z both have assets of $1 billion. The return on assets for both banks is the same. Bank Y has liabilities of $800 million while Bank Z’s liabilities are $900 million. In which bank would you prefer to hold ...Are U.S. banks increasing in size? Use FRED to plot since 1984 on a quarterly basis the number of U.S. commercial banks (FRED code: USNUM) and the volume of their deposits (FRED code: DPSACBM027SBOG). Download the data and ...
Post your question