When a Bank Takes Savings from Many Small Savers and Lends

question 23

Multiple Choice

When a bank takes savings from many small savers and lends it to many borrowers, the bank:

• A) decreases the risk to savers through diversification.
• B) increases the risk to borrowers through high transaction costs.
• C) decreases the risk to savers through economies of scale.
• D) decreases the return to savers and increases the cost to borrowers.

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