Why Do Households Prefer to Use FIs as Intermediaries to Invest

question 101

Multiple Choice

Why do households prefer to use FIs as intermediaries to invest their surplus funds?

• A)Transaction costs are low to the household since FIs are more efficient in monitoring and gathering investment information.
• B)To receive the benefits of diversification that households may not be able to achieve on their own.
• C)The FI has can benefit from combining funds and negotiating lower asset prices and transactions costs.
• D)The FI can provide insurance at relatively low cost that will protect funds under management.
• E)All of the options.

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Definitions:

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