When a Financial Institution Accepts Funds from Savers and Pools

question 242

Multiple Choice

When a financial institution accepts funds from savers and pools this money into a portfolio of diversified financial instruments, it is

• A) reducing information costs.
• B) reducing transaction costs.
• C) spreading risk.
• D) preventing fraud.

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Definitions:

Valves

Mechanical or biological devices designed to regulate the flow of fluids by opening, closing, or partially obstructing passageways.

Sequence

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

Carbon Monoxide Detector

A device that detects the presence of carbon monoxide gas in the air to prevent carbon monoxide poisoning.

Hemoglobin

A protein in red blood cells that carries oxygen from the lungs to the body's tissues and returns carbon dioxide from the tissues back to the lungs.