Question

What advantages do financial intermediaries offer an investor? A. They offer liquidity, low interest rates, and risk-free investment. B. They offer securities, interest-free loans, and diversification. C. They share risks, provide information, and provide liquidity. D. They share securities, provide liquidity, and assume risk.

Answer 1

Financial intermediaries offer advantages such as A. liquidity, risk-sharing, and information to investors.

Step-by-step explanation:

Financial intermediaries offer several advantages to investors. They provide liquidity, which means investors can easily convert their investments into cash when needed. Financial intermediaries also offer risk-sharing by spreading the risk of investments among a large number of investors. Additionally, they provide information about investment opportunities and help investors make informed decisions.

Another advantage is risk-sharing. Financial intermediaries help investors spread their risks by pooling funds from multiple investors and investing in a diversified portfolio. This diversification reduces the overall risk for individual investors and helps protect their investments from market fluctuations. Financial intermediaries assume certain risks on behalf of investors. For example, banks may assume the risk of default on loans they provide to investors, reducing the investor's risk exposure.