1. What is the primary role of the financial system?

2. Compare and contrast debt and equity as a source of funds for financial claims.

3. What are some problems with direct financing that make indirect financing more attractive?

4. Explain the concept of financial intermediation. How does the possibility of financial intermediation increase the efficiency of the financial system?

5. How do financial intermediaries generate profits?

6. Explain the differences between the money markets and the capital markets. Which market would Tesla use to finance a new vehicle assembly plant?

7. Explain the statement: A financial claim is someones asset and someone elses liability.

8. What are the major risks faced by financial institutions and why is it important that each is carefully managed?

9. Discuss the three forms of financial market efficiency. Why is it important that financial markets be efficient?