One Characteristic of a Financial Intermediary Is That

question 9

Multiple Choice

One characteristic of a financial intermediary is that

• A)it acts as a broker in the sale of stocks and bonds.
• B)it cannot processes information.
• C)it is a lending institution only.
• D)it intermediates between workers and firms.
• E)it transforms assets.

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Definitions:

After-Tax Cost

The actual cost of an expense or investment to a company or individual after accounting for the effects of taxes.

WACC

The Weighted Average Cost of Capital (WACC) refers to the average rate of return a company is expected to pay to its security holders to finance its assets.

Debt Ratio

The debt ratio is a financial metric that measures the extent of a company’s leverage, calculated by dividing total liabilities by total assets.

Cost of Debt

The effective rate that a company pays on its current debt, included in capital structure calculations to assess overall cost of capital.