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

question 12

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 the above.

---

Definitions:

DSM-5

The fifth edition of the Diagnostic and Statistical Manual of Mental Disorders serves as an essential reference for healthcare professionals to accurately identify mental disorders.

Male Erectile Disorder

A type of sexual dysfunction characterized by the inability to develop or maintain an erection during sexual activity.

Ejaculation

The act of ejecting semen from the body during sexual climax.

Hypersexuality

Excessive interest or involvement in sexual activity at levels high enough to become clinically significant.