Financial System and Interest Rates A) Provide an example of a situation where y

Question

Financial System and Interest Rates

A)     Provide an example of a situation where you have acted as a supplier of capital and discuss whether this has been through a financial intermediary or a financial market.

B)      Provide an example of a situation where you have acted as a demander of capital and discuss whether this has been through a financial intermediary or a financial market.

C)      Discuss why the secondary markets are critical to firms who want to raise capital given that firms raise capital in the primary markets and not the secondary markets. To get full credit, you need to clearly explain your answer. Note that while there is more than one viable reason, you need to only address one reason – just address it well.

Explanation / Answer

Answering only the 1st question as per Chegg policy.

The situation where I acted as a supplier of capital was when I issued shares of a company through its initial public offer.

This was done through financial market. Through this methodology, I could gain ownership of the shares and the company in return got capital to expand its business.

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