Financial engineering has been disparaged as nothing more than paper shuffling.

Critics argue that resources used for rearranging wealth (that is, bundling and unbundling financial assets) might be better spent on creating wealth (that is, creating real assets). Evaluate this criticism. Are any benefits realized by creating an array of derivative securities from various primary securities?

12 . Examine the balance sheet of commercial banks in Table 1.3 . What is the ratio of real assets to total assets? What is that ratio for nonfinancial firms ( Table 1.4 )? Why should this difference be expected? LO.1