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    Financial Intermediary

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    a) Is an investment bank, while facilitating the issue of securities, acting as a financial intermediary? Explain.

    b) Is an insurance company a financial intermediary? Explain.

    c) The savings rate domestically has increased, probably due to uncertainty about the future (as a result of the recent economic downturn). All else equal, how should this affect market interest rates?

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    Solution Preview

    Question A
    Financial intermediation involves the transfer of funds between suppliers and those who need them. Hence, investment banks also act as financial intermediaries in that they aid the issuer of the securities to secure the ...

    Solution Summary

    The solution determines whether companies are a financial intermediary.

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