1- Why are financial markets important to the health of the economy?

2- What types of risks do financial institutions face?

3- Why do managers of financial institutions care so much about the activities of the Federal Reserve System/Central Bank?

4- In a world without information and transaction costs, financial intermediaries would not exist. Is this statement true, false or uncertain? Explain your answer.

5- Because corporations do not actually raise any funds in secondary markets, they are less important to the economy than primary markets. Comment.