diversify their portfolios
gather all relevant information
assess credit risk of borrowers
advertise for needed investments E. all of above
Answer is Right!
Answer is Wrong!
The correct answer is: E. all of the above
Financial intermediaries exist because small investors cannot efficiently:
- Diversify their portfolios. Diversification is the process of spreading your money across different types of investments to reduce risk. It is difficult and expensive for small investors to do this on their own, but financial intermediaries can do it for them.
- Gather all relevant information. It is difficult and time-consuming for small investors to gather all the information they need to make informed investment decisions. Financial intermediaries have the resources to do this for them.
- Assess credit risk of borrowers. It is difficult and risky for small investors to lend money to borrowers. Financial intermediaries have the expertise to assess credit risk and make loans to borrowers who are likely to repay them.
- Advertise for needed investments. It is difficult and expensive for small investors to advertise for investments that meet their needs. Financial intermediaries can do this for them.
In short, financial intermediaries exist to help small investors overcome the challenges of investing. They do this by providing diversification, information, credit assessment, and advertising services.