1. Compare and contrast direct finance and indirect finance. Which is more likely to have a larger share of the total financial market in a mature economy? In a young economy? Why?
2. What is the relationship between the efficiency of a financial system and the rate of economic growth?
3. Describe the major types of risks to financial securities, and give a specific example of each. How do investors measure risk?
4. What is liquidity, and why do investors care about it?