Direct Finance

When borrowers borrow funds directly from the financial market without using a third-party service, such as a financial intermediary, it is called direct finance. Brokers, dealers, and investment bankers play essential roles in direct financing. This method is different from indirect financing, where a financial intermediary takes the money from…
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Principles of Money And Banking

Money is anything that is generally accepted as payment. Ex: cash or checking account. A double of coincidence of wants is necessary to facilitate the trade of goods and services, i.e., like in the barter system; a trade would only happen if you wanted what I had and you had what I wanted. Banks are financial institutions that accept deposits and…
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Advantages of Free Trade

Trade around the world is becoming increasingly barrier-free, but there are still many people who think that free trade is bad for the economy. They believe that free trade hurts domestic production, while that may be true, the advantages of free trade lead to increased competition which means better quality products at a lower price for end…
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Theory of Efficiency

There are three different Theories of Efficiency that we are going to focus on. The first Theory of Efficiency is Pareto efficiency or Pareto optimality. The second is the Kaldor–Hicks improvement, and lastly the Zero-profit condition or Zero Profit Theorem. Theory of Efficiency - Pareto Efficiency Pareto Efficiency or Pareto optimality is a…
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Theory of Asset Demand

A firm or individual's decision for allocating its wealth amongst assets is known as the Theory of Asset Demand or Portfolio-Choice Theory. Demand For An Asset Depends On Four Factors 1. Wealth As wealth increases, the demand for financial assets also increases. There are two types of financial assets: Necessity assets: For…
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