An important financial institution that ln the initial erf securities in the pnmary market is the investment bank. commercial bank. stock exchange. brokerage house The presence of transaction costs in financial markets explains, in part, why financial intermedianos and indirect finance play much an important role in financial markets equity and bond financing play such an important role in financial markets. corporations get more funds through equity financing than they get from financial intermediaries. direct financing is more important than indirect financing as a souror of fundsAn investor who puts all her funds into one asset_her portfoliosis increases; diversification decreases; diversification Q increases; average return decreases; average return The presence of_in financial markets leads to advert? selection and moral hazard problems that interfere with the efficient functioning of financial markets noncoilaterali/ed risk free-riding asymmetric Information costly state verification When I he least desirable credit risks are the ones most likely to seek loans, lenders are subject to the moral hazard problem. adwrse selection problem. shirking problem. free-rider problem pnncipai-agent probJem. An $8,000 coupon bond with a $400 annual coupon payment has a coupon rate of 5 percent. 8 percent Q 10 percent. 40 percent. If you expect the inflation rate to be 5 percent next year and a one-year bond has a yield to maturity of 7 percent, then the real interest rale on this bond is 12 percent. -2 percent Q 2 percent. 12 percvnt