How do you identify financial instruments?

Financial instruments are a type of asset that you can use to invest and save money. They come in different forms and have varying levels of risk associated with them. Knowing the types of financial instruments available, how they work, and the risks and benefits associated with each can help you make an informed decision […]

Read More   

How do you control credit risk?

Credit risk is the potential for a borrower to default on their loan obligations. It matters to lenders and borrowers alike because it affects the amount of money that can be borrowed or loaned, as well as the terms of the loan agreement. For example, if a lender perceives higher credit risk associated with a […]

Read More   

How do you calculate financing costs?

Financing costs are the price of borrowing money, whether it be from a bank, credit card company, or other financial institution. Financing costs can take many forms, but most often come in the form of interest charges. Knowing how to calculate financing costs and understanding when certain calculations are necessary is an important part of […]

Read More   

How do financial intermediaries work?

Financial intermediaries are institutions that act as a bridge between borrowers and lenders. They provide services such as loan origination, underwriting, and servicing of loans. Banks, credit unions, investment banks, insurance companies, pension funds and other financial institutions all serve as intermediaries in some capacity. The benefits of using a financial intermediary to borrow or […]

Read More   

How do financial intermediaries reduce risk?

Financial intermediaries are financial institutions that act as a middleman between lenders and borrowers. They provide a service by facilitating the flow of funds between those with excess funds (e.g., savers) to those looking for funds (e.g., businesses). By doing so, they increase the efficiency of capital markets and reduce risk for both lenders and […]

Read More