1. Explain why banks, which would seem to have a comparative advantage in gathering information, have not eliminated the need for the money markets. What are three characteristics of money market securities? Do money market rates usually move together over time? Why or why not? Why would an investor use money market securities instead of putting their money in the stock market, bond market, or a bank? A borrower?

2. How have mortgages changed over the last 200 years? Why has online lending become more popular over the last decade, and what are the main advantages and disadvantages? Why do banks typically sell mortgages to other investors? How do banks profit off selling loans if they are immediately sold to another investor? Explain why mortgages are bundled before they are sold to investors.