Which of the Following Is TRUE Regarding Transactions Costs and Information

question 3

Multiple Choice

Which of the following is TRUE regarding transactions costs and information costs?

• A) Both benefit borrowers at the expense of savers.
• B) Both benefit savers at the expense of borrowers.
• C) Transactions costs hurt savers while information costs hurt borrowers.
• D) Both create profit opportunities for those who can reduce these costs.

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Definitions:

Same Day Value

A banking term indicating that a fund transfer or transaction will be credited or debited with its value dated the same day the instruction is received.

Cash Concentration Account

A cash concentration account is a bank account used by companies to consolidate and manage their cash flows, usually involving the transfer of funds from multiple accounts into this single account.

Firm Benefits

Advantages or favorable factors resulting from the policies or practices of a particular company, including financial remuneration and non-monetary perks.

Liquidity

How effortlessly an asset can be turned into cash without altering its market price.