Why Do Households Prefer to Use FIs as Intermediaries to Invest

question 64

Multiple Choice

Why do households prefer to use FIs as intermediaries to invest their surplus funds?

• A)Transaction costs are low to the household since FIs are more efficient in monitoring and gathering investment information.
• B)To receive the benefits of diversification that households may not be able to achieve on their own.
• C)The FI can benefit from combining funds and negotiating lower asset prices and transaction costs
• D)All of the listed options are correct.

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Definitions:

Sequence

A specific order in which related events, movements, or things follow each other.

Transformer Harmonic Derating Factor

A multiplier used to adjust the rating of a transformer based on the presence of harmonics in the electrical system, to avoid overheating and ensure safe operation.

RMS Phase Current

The root mean square value of the current in one phase of a multi-phase system, providing a measure of the effective current level.

Instantaneous Peak Value

The highest absolute value of a varying quantity (voltage or current) at a given instant.