Please explain the following questions to me in the world of banking.
Among their many functions: nancial instihrb'ons O A. Transform iliquid assets into liqLI'd assets. 0 El. Reduce transactions costs through things liloe standard lending contracts. 0 (3. Pool the frrnds of many small savers to maloe large loans. D.AII ofthe above. What is the distinction between debt and equity marloets? O A. Debt markets are the marloet for mortgages, loans. and bonds while equity maltoets are the marloets for shocks 0 El. Debt markets are those that are used only by individuals and rms ttrat are on the verge ofbanknrptcy while equity markets provide better borrowing terms to those borrowers that have excelent credit rati'lgs. O (3. Debt markets are used pri'nar'ilyI by ttrose ttrat are buying nancial instruments usi'lg borrowed nds: while equity markets alovlrI people to buy nancial assets using only the: own funds. 0 D. None ofthe above is correct. The yield on commercial paper is always ligher ttran the yield on a Treasury bill with ttre same maturity. This is because 0 A. cash ows He less valuable thher into the xture. 5) El. risk requires compensation and the commercial paper can'ies MORE risk than the Treasury bill. O C. risk requires compensation and the commercial paper can'ies LESS rislc than the Treasury hill. 0 D.there is no secondary market for commercial paper. US. currency 0 A. is considered community money because it is backed by gold resennes in Fort Knox. 0 E. is considered community money only in intemational transactions. 0 C. is considered at money because it never circLIatoI outside ofthe United States. 0 D. is considered at money because the govemrnerlt gives it vue as legal tender. Credit detault swaps: O A. Are traded on an exchange and marked to marloet daily. 0 El. Allow the buyer to protect themselves from certain debt detaull risks. 0 C.Typically involve exchanges otJoed versus oatr'ng interest late payments. 0 DA" ofthe above