Financial Market Tutorial
Tutorial 1
1. Ice breaking session
2. General overview of financial markets and institutions module
3. Group project briefing
4. Mid semester and final examination
5. Other relevant matters
Tutorial 2 : Financial Intermediation
1. Why is financial intermediation important in the economy?
Because they channel funds from those who do not have a productive use for them (surplus sector) to those who do (deficit sector), thereby resulting in higher economic efficiency.
2. Explain why a higher interest rates will lead to lower economic growth?
Businesses would cut investment spending because the cost of financing this spending is now
higher, and consumers would be less likely to purchase a house or a car because the cost of
financing their purchase is higher.
3. Explain the impact of interest rates on cost of funds and asset valuation like stocks and bonds.
• A change in interest rates affects the cost of acquiring funds for financial institution
• In addition, changes in interest rates affect the price of assets such as stock and bonds that the financial institution owns which can lead to profits or losses.
• High interest affects profitability of company, thus stock prices drop
• High interest lead to lower bond price
4. Why firms do not normally raise fund when the stock market is weak?
The lower price for a firm’s shares means that it can raise a smaller amount of funds, and so
investment in plant and equipment will fall.
5. Explain the impact of a bullish stock market on consumption and economy
Higher stock prices mean that consumers’ wealth is higher and so they will be more likely to
increase their spending.
Tutorial 3 : Financial Intermediation
1. Why do you still want to deposit your money with a bank that pays 5% although you can lend
it directly to a borrower at 10%?
Because the costs of making the loan to your
1. Ice breaking session
2. General overview of financial markets and institutions module
3. Group project briefing
4. Mid semester and final examination
5. Other relevant matters
Tutorial 2 : Financial Intermediation
1. Why is financial intermediation important in the economy?
Because they channel funds from those who do not have a productive use for them (surplus sector) to those who do (deficit sector), thereby resulting in higher economic efficiency.
2. Explain why a higher interest rates will lead to lower economic growth?
Businesses would cut investment spending because the cost of financing this spending is now
higher, and consumers would be less likely to purchase a house or a car because the cost of
financing their purchase is higher.
3. Explain the impact of interest rates on cost of funds and asset valuation like stocks and bonds.
• A change in interest rates affects the cost of acquiring funds for financial institution
• In addition, changes in interest rates affect the price of assets such as stock and bonds that the financial institution owns which can lead to profits or losses.
• High interest affects profitability of company, thus stock prices drop
• High interest lead to lower bond price
4. Why firms do not normally raise fund when the stock market is weak?
The lower price for a firm’s shares means that it can raise a smaller amount of funds, and so
investment in plant and equipment will fall.
5. Explain the impact of a bullish stock market on consumption and economy
Higher stock prices mean that consumers’ wealth is higher and so they will be more likely to
increase their spending.
Tutorial 3 : Financial Intermediation
1. Why do you still want to deposit your money with a bank that pays 5% although you can lend
it directly to a borrower at 10%?
Because the costs of making the loan to your