Which Financial Institution Is Not Involved in the Indirect Method

question 187

Multiple Choice

Which financial institution is not involved in the indirect method of financial intermediation?

• A)Banks
• B)Investment bankers
• C)Mutual funds
• D)Pension funds

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Definitions:

Risk-free Rate

The interest rate at which an investor can invest in an absolutely risk-free security over a specified period.

Arbitrage Opportunity

A situation where a trader can profit from differences in price of the same or similar financial instruments on different markets or in different forms.

Risk-free Rate

The theoretical rate of return of an investment with no risk of financial loss, often represented by government bonds.

Diversified Portfolios

Investment portfolios constructed to spread risk across various asset classes or sectors to reduce volatility.