1) Explain THREE main differences between the role of a commercial bank and an investment bank.
(9 marks)
2)
a. Explain THREE main roles of a central bank.
(9 marks)
b. Explain TWO main differences between the role of development financial institutions and commercial banks.
(6 marks)
3) How can economies of scale help explain the existence of financial intermediaries?
(5 marks)
4) solve the problem of asymmetric information can lead to the bank?
(5 marks)
5) "The more collateral that is backed up to the loan, the less the lender has to worry about the problem of bad selection." Is this statement true or false? Explain your answer.
(5 marks)