FIN 701 Lecture Notes - Lecture 5: Federal Deposit Insurance Corporation, Canada Deposit Insurance Corporation, Farm Credit Canada
13 Apr 2016
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Document Summary
Fis perform the essential function of channelling funds from those with surplus funds (suppliers of funds) to those with shortages of funds (users of funds) ***these special functions are summarized in table 1 1. **corporations issue securities to finance their investments in real assets and cover the gap between their investment plans and their internally generated savings, such as retained earnings. **as shown in figure 1 1, in such a world, savings would flow from households to corporations. In return, financial claims (equity and debt securities) would flow from corporations to household savers. ** as shown in figure 1 2, fis or intermediaries are standing, or intermediating, between the household and corporate sectors. Any given fi might specialize in one or the other or might do both simultaneously. Low level of fund flows costly to monitor the actions of the firm o. Should not waste households" money with projects w/ low or negative npv and results in .
