Financial Intermediaries Exist Because Small Investors Cannot Efficiently

question 52

Multiple Choice

Financial intermediaries exist because small investors cannot efficiently

• A) diversify their portfolios.
• B) assess credit risk of borrowers.
• C) advertise for needed investments.
• D) diversify their portfolios and assess credit risk of borrowers.
• E) All of the options.

Understand the modern view of technological advance as an internal element of capitalism driven by profit motives and competition.

Recognize the distribution of business R&D spending among innovation, invention, and basic research.

Grasp the concept of diffusion through the adoption of innovations by competitors or other industries.

Identify the characteristics and examples of start-up firms.

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Definitions:

Central Limit Theorem

A theorem that enables one to use the normal probability distribution to approximate the sampling distribution of x whenever the sample size is large.

Infinite Population

A hypothetical population of unlimited size, often used in statistical modeling to simplify analysis.

Sample Mean

The average value calculated from a sample of a population.

Sampling Distribution

The probability distribution of a statistic obtained through a large number of samples drawn from a specific population.