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    Case Study NO.1: Name - Tanvir Ahmed Onif ID - 3687 Batch - 54D

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    Tanvir Onif
    The document contains case studies and answers related to financial topics such as banking, peer-to-peer lending, student loans, and capitalization of interest. It provides definitions for key terms like financial intermediation between savers and borrowers, and describes some advantages of peer-to-peer lending sites over traditional banks for both lenders and borrowers. The responses also discuss capitalizing interest on student loans and reasons why students may choose to postpone interest payments until after graduation.

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    Case Study NO.1: Name - Tanvir Ahmed Onif ID - 3687 Batch - 54D

    Uploaded by

    Tanvir Onif
    120 views2 pages
    The document contains case studies and answers related to financial topics such as banking, peer-to-peer lending, student loans, and capitalization of interest. It provides definitions for key terms like financial intermediation between savers and borrowers, and describes some advantages of peer-to-peer lending sites over traditional banks for both lenders and borrowers. The responses also discuss capitalizing interest on student loans and reasons why students may choose to postpone interest payments until after graduation.

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    The document contains case studies and answers related to financial topics such as banking, peer-to-peer lending, student loans, and capitalization of interest. It provides definitions for key terms like financial intermediation between savers and borrowers, and describes some advantages of peer-to-peer lending sites over traditional banks for both lenders and borrowers. The responses also discuss capitalizing interest on student loans and reasons why students may choose to postpone interest payments until after graduation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    120 views2 pages

    Case Study NO.1: Name - Tanvir Ahmed Onif ID - 3687 Batch - 54D

    Uploaded by

    Tanvir Onif
    The document contains case studies and answers related to financial topics such as banking, peer-to-peer lending, student loans, and capitalization of interest. It provides definitions for key terms like financial intermediation between savers and borrowers, and describes some advantages of peer-to-peer lending sites over traditional banks for both lenders and borrowers. The responses also discuss capitalizing interest on student loans and reasons why students may choose to postpone interest payments until after graduation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Name – Tanvir Ahmed Onif

    ID – 3687
    Batch – 54D

    Case Study NO.1


    a. What does the article mean when it describes banks as “intermediating”
    between savers and borrowers?

    Ans.

    By providing loans to borrowers and collecting deposits from savers, the bank
    functions as a financial intermediary between borrowers and savers.
    Financial intermediation is the process of pooling funds from different sources and
    using these to provide loans and make investments. The people and companies
    who supply these funds and make deposits into the bank (for example, savers),
    receive interest for allowing their money to be used for loans or investments.
    Borrowers pay interest for the privilege of borrowing other people’s money.
    Therefore, by channeling funds from savers to borrowers, the bank creates a
    mechanism for making best use of the funds it has collected and pooled from
    different sources. It is this that leads to more efficient utilization of funds within
    the economy as a whole.
    The bank’s respective duties to its savers and borrowers conflict because, on the
    one hand, the bank must be risk-averse and cautious with savers’ money; on the
    other hand, it must embrace a level of risk in order to lend money.
    The bank therefore needs to reconcile these duties and to intermediate between
    deposit customers’ expectations that risk will be avoided and borrowers’
    expectations that there will be some risk.

    b. What advantages might a peer-to-peer lending site have for savers and
    borrowers when compared with using a bank?

    Ans.

    Peer-to-peer lending enables individuals to obtain loans directly from other


    individuals, cutting out the financial institution as the middleman. Peer-to-peer
    lending is also known as “social lending” or “crowd lending.” It has only existed
    since 2005, but the crowd of competitors already includes Prosper, Lending Club,
    Peerform, Upstart, and Street Shares.
    Peer-to-peer loans can offer quite a few advantages over other forms of borrowing,
    such as more competitive interest rates, flexible terms, and a fast and convenient
    online application process. Let's have a look at these in more detail.
    Online application for a P2P loan is fast and convenient
    As peer-to-peer lending platforms are typically entirely online, it means that the
    application process is quick and convenient. This can be very handy if you wish to
    secure your funds quickly. Most P2P platforms have a waiting list of investors to
    provide loans to borrowers which, when combined with an automated matching
    process, means turnaround time on getting your money can be very quick –
    sometimes as little as a few hours.
    Here at Lending Works, we have taken great care to make our application
    process as easy and quick as possible. Getting a personalized quote takes less than
    two minutes; then, if you're provisionally accepted, it's simply a case of providing
    a few more details and finishing your application. We'll then make a final decision
    and get back to you with a loan offer if you're approved. Once you accept, the
    funds will be transferred. The whole process is quick and total turnaround time is
    around typically less than 48 hours.

    CASE STUDY NO. 02

    a. What does the financial planner mean when noting that the interest
    payments will “capitalize”?

    Ans.

    b. Why does she believe that making the payments would be to your
    financial benefit? Are there good reasons some students decide to
    postpone making the interest payments until after they graduate?
    Briefly explain.
    Ans.

    CASE STUDY NO. 03

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