42 PA R T I Introduction *11 If there were no asymmetry in the information that a borrower and a lender had, could there still be a moral hazard problem? earning a 5% interest rate at the bank and having the bank lend her the funds at a 10% interest rate rather than lend her the funds yourself? 12 In a world without information and transaction costs, financial intermediaries would not exist Is this statement true, false, or uncertain? Explain your answer 14 How does risk sharing benefit both financial intermediaries and private investors? *13 Why might you be willing to make a loan to your neighbour by putting funds in a savings account *15 Discuss some of the manifestations of the globalization of world capital markets WEB EXERCISES One of the single best sources of information about financial institutions is the financial data produced by the OSFI Go to www.osfi-bsif.gc.ca, click on Banks and then Financial Data Banks and answer the following a What percent of assets domestic chartered banks hold in loans? What percentage of assets are held in mortgage loans? b What percent of assets trust companies hold in mortgage loans? c What percent of assets cooperatives hold in mortgage loans and in consumer loans? The most famous financial market in the world is the New York Stock Exchange Go to www.nyse.com a Click on Information for Media and summarize the activity in the market in terms of movements in the Dow Jones Industrial Average and the NYSE Composite Index b Firms must pay a fee to list their shares for sale on the NYSE What would be the fee for a firm with million common shares outstanding? Be sure to visit the MyEconLab website at www.myeconlab.com.This online homework and tutorial system puts you in control of your own learning with study and practice tools directly correlated to this chapter content