Financial Intermediaries Are Important Because

question 326

Multiple Choice

Financial intermediaries are important because

• A) they bring lenders and borrowers together in a way that lowers transaction costs.
• B) they provide large funds to the stock market.
• C) they employ large numbers of people.
• D) they increase costs for banks.

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Definitions:

Equivalent Interest Rate

An interest rate that, when considering compounding and other factors, is effectively equal to a comparative rate.

Missing Interest Rate

The interest rate that is not specified or needs to be determined in a financial equation or scenario.

Equivalent Interest Rate

A rate that reflects the actual annual cost of a loan or the earnings on an investment, taking into account the effect of compounding.

False Consensus Effect

A psychological bias where individuals believe their own viewpoints, actions, and behaviors are more common in the general population than they actually are.