Question Fourteen 3} b) Critically evaluate the importance of financial markets in the development of the Ghanaian Economy. 1What problems do players in the financial market encounter? TWhat in your view should be the role of government in the financial market? Why is it necessary to regulate the financial market? Question Fourteen 3} b) Should financial markets be regulated at all? Discuss. Discuss the role of government in financial intermediation. Do you think government must be a player and a regulator in the financial market? Question Fifteen 3) '3) According to Development Finance theory, a serious agency problem might develop between the management of the target firm and the shareholders concerning the takeover of the firm. Discuss the agency problem alluded here and how golden parachutes arrangements will help in overcoming this agency problem. Can golden parachutes provision themselves also create agency problems for the shareholders? Carefully expatiate Share price maximization objective assumes that shareholders have the power to discipline managers who do not maximize wealth using two mechanisms namely, annual meetings and the board of directors. Discuss the effectiveness of these two traditional mechanisms for shareholders control. Carefully expatiate Suppose you own stock in a company. The current price per share is 25. Another company has just announced that it wants to buy your company and will pay $35 per share to acquire all the outstanding stock. Your company's management immediately begins fighting off this hostile bid. Is management acting in the shareholders' best interests? Why or why not? Carefully expatiate and elucidate Question Sixteen Financial markets work within a defined set of institutional frameworks. In order for the market to work optimally, the institutional framework has to foster efficiency. However, while markets everywhere do not function in a perfect manner, the degree of weakness in developing countries is very high. The challenges present in the financial markets hinder financial development, and thus impact negatively on economic growth. There are a number of principles that account for the high transaction costs associated with financial transactions have to be discussed. Briey discussed how the following pose as a threat to the efficiently financial markets a} b) C} d) e} 3 Economic Contracts Asymmetric Information PrincipalAgent Theory Transaction Cost Moral Hazards Adverse Selection Question Seventeen