Small Savers Prefer to Use Financial Intermediaries Rather Than Lending

question 30

Multiple Choice

Small savers prefer to use financial intermediaries rather than lending directly to borrowers because:

• A) financial intermediaries offer the savers a wide portfolio of financial instruments.
• B) financial intermediaries offer much higher interest rates than can be obtained directly from borrowers.
• C) borrowers dislike dealing with savers.
• D) savers have a claim with the ultimate borrower via the financial intermediary.

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Definitions:

Product Costs

Costs that are incurred to acquire or manufacture a product, including direct materials, labor, and overhead expenses.

Period Costs

Expenses that are not directly tied to the production of goods and are instead accounted for as expenses in the period they are incurred.

Direct Materials

The raw materials directly traced and integral to the finished product in the manufacturing process.

Work in Process

Inventory that includes goods partially through the production process but not yet complete.