Question :
(a) Compare the financial system of the Mauritius and USA. Give differences between the two systems.
(b) One of the facilities given by the financial system is "Risk Sharing". Briefly explain how the financial system enables investors to share risk.
(c) Asymmetric information is a typical problem faced by financial intermediaries.
(i) Asymmetric information gives rise to two specific problems. What are they?
(ii) Explain how the problems in c(i) above arise in the lending activity of a bank.
(iii) Explain three monitoring measures that a bank can put in place to reduce the risk related with asymmetric information?