The following are the advantages of financial intermediaries, except: A. Provide guaranteed returns for investor to maximize their wealth. B. Economies of scale which reduces the costs of lending and borrowing. C. None of the choices. D. Provides convenience to the borrowers of funds.
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The following are the advantages of financial intermediaries, except:
A. Provide guaranteed returns for investor to maximize their wealth.
B. Economies of scale which reduces the costs of lending and borrowing.
C. None of the choices.
D. Provides convenience to the borrowers of funds.
Step by step
Solved in 2 steps
- What are the basic risk faced by financial intermediaries? Discuss each throughly.They act as mediators between two parties: those who supply funds and those who seek them. *A. Financial IntermediariesB. None of the choicesC. Financial SecuritiesD. DSUsE. SSUs(b) Discuss the roles of financial intermediaries in solving adverse selection and moral hazard.Support your answers with real-life business examples.
- Question: Explain, using examples, the importance of financial intermediation to the flow of funds in an economy.Q1. The importance of studying financial markets and financial institutions for the citizens. (self-framed 4 sentences)Because financial intermediaries operate on a big scale, this relates to minimizing the costs of transactions incurred by them. *a. Economies of Scopeb. Economies of Scalec. Economic Convenienced. Economies of Costse. None of the choices.
- Financial intermediaries a.reduce the cost of financial transactions. b.provide safety of resources only for the large borrowing customers who can afford it. c.increase the cost of financial transactions but offset these higher costs by providing safekeeping of customer funds. d.provide handling of payments but usually less efficiently than other firms.Which statement is incorrect related to financial intermediaries (institutions)? a. They are firms that specialize in financial intermediation - a process of borrowing funds from SSUs and lending such funds to the DSUs. b. The main objective of financial intermediaries is to convert savings from SSUs into investments. c. They are the biggest investors in equity securities in the PSE d. They offer the highest returns and lowest risks when compared to alternative investments available to SSUs. e. none of the aboveIf bad credit risks are the ones who most actively seek loans, then financial intermediaries face (a) a moral hazard problem. (b) an adverse selection problem. (c) a free-riding problem. (d) no problem at all.
- Why are non-banking financial companies valuable to the financial system?Elaborate all the components of non-banking Financial Companies. No plagiarism.9. Banks can lower the cost of information production by applying one information resource to many different services. This process is called Question 9 options: a) asset transformation. b) economies of scope. c) economies of scale. d) asymmetric information.Which is NOT a common characteristic of financial intermediaries? *A. None of the choices.B. Offers secure storage for their clients' assets.C. Having a diversified portfolio of investments.D. Clients are given investment advice as to which investments are profitable.E. The risks posed by various financial intermediaries are the same.