What are five risks common to financial institutions


Questions:

1. What are five risks common to financial institutions?

2. Explain how economic transactions between household savers of funds and corporate users of funds would occur in a world without financial intermediaries.

3. How do FIs alleviate the problem of liquidity risk faced by investors who wish to invest in the securities of corporations?

4. How can financial institutions invest in high-risk assets with funding provided by low-risk liabilities from savers?

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