There Are Two Extreme Views of Financial Innovation

question 11

Multiple Choice

There are two extreme views of financial innovation. Which of the below is ONE of these?

• A) Some hold that the essence of innovation is the introduction of financial assets that are less efficient for redistributing risks among market participants.
• B) There are some who believe that the minor impetus for innovation has been the endeavor to circumvent regulations and find loopholes in tax rules.
• C) Some hold that the essence of innovation is the introduction of financial instruments that are more efficient for redistributing risks among market participants.
• D) None of these

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Definitions:

Sales

The transactions or activities involved in selling goods or services in return for money or other compensation.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, or insurance premiums.

Negative Returns

A situation in which an increase in the amount of inputs used leads to a decrease in the level of output, often seen in cases of over-investment or inefficient production processes.

Worker

An individual who performs tasks or services for compensation; an employee.