Small Savers Would Rather Use Financial Institutions Than Lend Directly

question 75

Multiple Choice

Small savers would rather use financial institutions than lend directly to borrowers because:

• A)Financial institutions will offer the savers higher interest rates than the savers could obtain directly from borrowers
• B)Lenders wouldn't want to deal with small savers
• C)Savers prefer to share risk
• D)The liquidity is lower with financial institutions but the return is higher

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Definitions:

Harvest Vehicles

Strategies or methods used by entrepreneurs and investors to exit a business while realizing the venture's value.

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.

Founder

An individual who establishes and builds an organization or a company from the ground up.

Public Company

A corporation whose shares are publicly traded on stock exchanges, allowing for widespread ownership among general investors.