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.

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Definitions:

Patella

The patella, commonly known as the kneecap, is a small, flat bone located in front of the knee joint. It protects the knee and connects muscles from the thigh to the lower leg.

Tendons

Fibrous connective tissues that attach muscles to bones, facilitating movement by transferring forces.

Hyoid Bone

A U-shaped bone in the throat that supports the tongue and is involved in swallowing.

Floating Rib

The last two pairs of ribs in humans that are not attached to the sternum or to other ribs, providing flexibility and mobility.