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

question 31

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)All of the listed options are correct.

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Definitions:

Transgender

An umbrella term for people whose gender identity differs from the sex they were assigned at birth.

Distress

Negative stress resulting from burdensome situations or pressures that can lead to mental and physical health issues.

Gender Development

The process by which individuals develop a sense of their gender identity and navigate the social roles, expectations, and behaviors associated with their gender.

Differentiate

To recognize or ascertain what makes someone or something different; in mathematics, it refers to computing the derivative of a function.