Which Three of the Following Economies of Scale Enable Intermediaries

question 1

Multiple Choice

Which three of the following economies of scale enable intermediaries to transform assets effectively?

• A) Risk spreading.
• B) Efficiencies in gathering information.
• C) Lower transaction costs.
• D) Low customer numbers.

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Definitions:

Coupon Rate

The interest rate on a bond that the issuer promises to pay to the bondholder until maturity.

Premium

The amount by which the price of something, especially a financial security, exceeds its principal or face value.

Interest Rates

The cost of borrowing money or the return on investment for savings, usually expressed as a percentage of the principal amount on an annual basis.

Bond Prices

The market price at which a bond is traded, influenced by interest rates, credit ratings, and the bond's term to maturity.