Learning the Reducing the Costs of Contracting and Information Processing

in LeoFinance •  3 months ago 

As any investors your main aim purchasing financial assets and develop the necessary skills to evaluate the profit and loss, after understand all this the investors can invest their assets when subsequent sale.

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When ever an investors in planning to give a loan to a business or consumer their should always always the skills of enforcing legal documents with as a contract to protect their interests.

After the loan has been made, monitor of the financial condition of the business is important and in a case that the company is violates the agreement for the loan legal action is necessary.

In addition to opportunity cost of information about your financial asset you must consider the cost of acquiring information this are mostly called information processing cost which associated withe writing loan agreements are contracting cost.

If the cost effective for financial intermediaries to maintain staffs because inverter into normal business, there are economies of scale that financial intermediaries in contracting and processing information about financial assets because of the amount of funds that they manage.

why reduced of cost the investors would accrue the benefit which are;

  • investors who purchase a financial claim of the financial intermediary.
  • issuers of financial assets (a result of lower funding costs.

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