Other
ECS3701 ASSIGNMENT 2 (SEM 2) 2022
- Course
- Institution
ANSWERS AVAILABLE
[Show more]
Seller
Follow
LolaJacobs
Reviews received
Content preview
ECS3701 ASSIGNMENT 02 S2 2022ECS3701
ASSIGNMENT: 02
Year: 2022
DOCUMENT PREVIEW:
2.01 If you were a private investor, would you and/or financial intermediaries benefit from risk-
sharing? Explain which party will benefit and why.
Risk sharing defined as sharing with another party the burden of loss or the benefit of gain, from
a risk, and the measures to reduce a risk.
Financial intermediaries can help reduce the exposure of investors to risk through the process of
risk sharing. Low transaction costs allow financial intermediaries to share risk at low cost.
Risk sharing benefits financial intermediaries because they gain on the spread between the
returns they earn on risky assets and the payments they make on the assets they have sold.
Financial intermediaries promote risk sharing by helping individuals to diversify and thereby lower
the amount of risk to which they are exposed.
Investors benefit because they are able to invest in a diversified portfolio of assets. In keeping
with the “golden rule” do not keep your eggs in one basket. Risk sharing is also referred to as
asset transformation, because, risky assets are turned into safer assets for investors which also
benefits investors.
1
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller LolaJacobs. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.88. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
78677 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now