The Primary Economic Function of the Financial System Is to

question 6

Multiple Choice

The primary economic function of the financial system is to

• A)keep interest rates low.
• B)provide expert advice to savers and investors.
• C)match one person's consumption expenditures with another person's capital expenditures.
• D)match one person's saving with another person's investment.

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Definitions:

Proxy Fights

Strategies employed by shareholders to influence company management and policies by voting on corporate issues, often seen in contests for control of the board.

Nonfinancial Businesses

Companies whose primary activities involve the production or supply of goods and services, rather than financial transactions and investments.

Real Asset(s)

Physical or tangible assets that have intrinsic value such as real estate, commodities, and natural resources.

Agency Problem

Conflicts of interest among stockholders, bondholders, and managers.