The Two Ways Financial Intermediaries Can Reduce Transactions Costs Are

question 96

Multiple Choice

The two ways financial intermediaries can reduce transactions costs are ________ and ________.

• A) economies of scale; expertise
• B) moral hazard; adverse selection
• C) direct finance; indirect finance
• D) stocks; bonds

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Definitions:

U.S. GAAP

Generally Accepted Accounting Principles in the United States, a framework of accounting standards, principles, and procedures.

Current Liabilities

Short-term financial obligations that a company is expected to pay within one year or one operating cycle, whichever is longer.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity levels for operating needs.

Total Assets

The sum of all assets owned by a company, indicating the total resources at its disposal.