Question

Question 1

Financial markets are very crucial to the development of an economy.

Discuss the types of financial markets and show how they support the Ghanaian Economy?

Question 2

Define the agency problem and list factors which facilitate the agency problem and how it can be resolved?

Answer 1

1. Financial market are very important for development of the overall economy because financial market helps in getting capital for various kind of business and it helps in long-term business growth and it also helps in generation of employment which will lead to higher gross domestic product which can be produced into the country.

Financial markets also includes stock market, which is known as an indication for the movement of the economy and it is widely followed so that various global investors can have an idea about the direction of the economy, so it is very important in overall growth and development of economy.

There are various types of financial markets in Ghanaian economy, which would be primary markets and secondary markets including capital markets and money markets.

2. Agency problem is the problem between principal and agent when agent works in his own interest other than working the interest of principal.

factors which facilitates the agency problem are the self goals of the agent which are not in line with the principles and increased remuneration of the agent .

It can be resolved through better communication and better cooperation between agent and principal and there should be a better channel of clearance of misunderstanding and management should also work on the behalf of the shareholder as they are the principal and management is agent.