What Is the Financial System? 1. How does the financial system contribute to economic security and prospernty in a capitalist society? The Flow of Funds 2. Suppose your great uncle decides to take this month's savings and purchase a bond issued by the Gateway Computer Company to finance an increase in compute components in their new factory. Describe how this exchange can be analyzed in the flow-of-funds framework. The Functional Perspective 3. Would you be able to get a student loan without someone else offering to guarante n 4. Give an example of a new business that would not be able to get fnancing i insurnance against risk were not available Suppose you invest in a real-estate development deal. The total $100,000. You invest $20,000 of your own money and the bank. Who bears the risk of this venture and why? deal. The total 5. borrow the other $80,00 from financing for something you want to do. Can you think of a way of overcoming tis problem? 6. Give an example of how the problem of moral hazard might prevent you from geting