Small savers prefer to use financial intermediaries rather than make loans to borrowers directly because
A)savers prefer to share risk.
B)financial intermediaries offer higher interest rates than could be obtained directly from borrowers.
C)savers reduce their tax liability by doing so.
D)borrowers dislike dealing with small savers.

Question

Quizplus · Accepted Answer

Small savers prefer to use financial intermediaries rather than make loans to borrowers directly because savers prefer to share risk. Financial intermediaries can pool the funds of multiple small savers to create a diversified portfolio of loans, which reduces the risk for individual savers. Additionally, financial intermediaries have expertise in assessing creditworthiness and managing risk, which can be helpful for small savers who may not have the knowledge or resources to do so themselves.

Small Savers Prefer to Use Financial Intermediaries Rather Than Make