Financial Markets Enable the Transfer of Risk By

question 8

Multiple Choice

Financial markets enable the transfer of risk by:

• A) requiring that risk-averse investors have access to U.S. Treasury bond markets.
• B) allowing individuals and firms less willing to bear risk to transfer risk to other individuals and firms more willing to bear risk.
• C) making sure that higher default risk is offset by greater liquidity.
• D) enabling even unsophisticated investors to purchase highly complex financial instruments.

---

Definitions:

Asset Turnover Ratio

A ratio measuring how effectively a business uses its assets to produce sales income.

Property, Plant, and Equipment

Tangible long-term assets owned by a business, used in the production or supply of goods and services, such as buildings, machinery, and vehicles.

Accumulated Depreciation

It represents the total amount of depreciation expense that has been recorded for an asset over its life.

Intangible Assets

Non-physical assets owned by a business, such as patents, trademarks, and copyrights.