If Financial Intermediaries Charge a Higher Rate of Interest to Lenders

question 35

Multiple Choice

If financial intermediaries charge a higher rate of interest to lenders than they pay to borrowers, then

• A)investing with borrowed funds involves a higher opportunity cost than investing with savings
• B)investing with saving involves a higher opportunity cost than investing with borrowed funds
• C)a firm is charged less interest to borrow than it can earn on savings
• D)the opportunity cost of investing with borrowed funds equals the opportunity cost of investing with savings
• E)a firm does not consider the market rate of interest when it makes investment decisions

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