The Reason FIs Can Offer Highly Liquid, Low Price-Risk Contracts

question 38

Multiple Choice

The reason FIs can offer highly liquid, low price-risk contracts to savers while investing in relatively illiquid and higher risk assets is

• A)because diversification allows an FI to predict more accurately the expected returns on its asset portfolio.
• B)significant amounts of portfolio risk are diversified away by investing in assets that have correlations between returns that are less than perfectly positive.
• C)because individual savers cannot benefit from risk diversification.
• D)because FIs have a cost advantage in monitoring their portfolios.
• E)All of these.

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Definitions:

Realistic Job Preview

A tool used in the recruitment process to give candidates a true sense of what a job entails, including both its positive and negative aspects.

Recruiter's Message

Communication from a recruiter to potential candidates, often containing information about job opportunities and inviting them to apply.

Executive Search Firm

A specialized recruitment service that helps organizations to find and recruit top-level executives and professionals for high-ranking positions.

Confidentiality

The obligation to protect sensitive information from unauthorized access or disclosure.