Question: Question 1 [CLO 1] (5 Marks) a. What is the definition of financial intermediation? How can the prospect of financial intermediation improve the financial system's

 Question 1 [CLO 1] (5 Marks) a. What is the definition

Question 1 [CLO 1] (5 Marks) a. What is the definition of financial intermediation? How can the prospect of financial intermediation improve the financial system's efficiency? (2 Marks) b. How can adverse selection problems affect the performance of financial institutions? (3 Marks) Question 2 [CLO 2] (5 Marks) a. Why municipal bonds are the priority of some investors? Why sometimes do investors avoid them? (3 Marks) b. What is a credit spread? How does credit spread move during the global financial crisis? (2 Marks)

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