Individuals May Find It More Advantageous to Purchase Claims from a Financial

question 20

Multiple Choice

Individuals may find it more advantageous to purchase claims from a financial intermediary rather than directly purchasing claims in capital markets because:
I. Intermediaries are better diversified than most individuals.
II. Intermediaries can exploit economies of scale in investing that individual investors cannot.
III. Intermediated investments usually offer higher rates of return than direct capital market claims.

• A) I only
• B) I and II only
• C) II and III only
• D) I, II, and III

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Definitions:

Intrinsic Value

The actual, inherent value of a security, determined through fundamental analysis without reference to its market value.

Unfriendly Merger

A type of acquisition or merger that takes place without the target company's consent or agreement, often involving hostile tactics.

Hostile Takeover

An acquisition attempt by a company by going directly to the company's shareholders or fighting to replace management to get the acquisition approved.

Competitive Rival

Competitive Rival refers to a competitor within the same industry or market that offers similar products or services, challenging a firm's market share.