One reason financial intermediaries earn profits is because:

Question

Quizplus · Accepted Answer

Financial intermediaries provide a valuable service by reducing transaction costs, which can include things like the time and effort required to find potential borrowers or lenders, the costs of verifying creditworthiness, and the expenses associated with documenting and executing loan or investment transactions. Since individuals benefit from these services, they are willing to pay intermediaries for them, and intermediaries earn profits as a result. Options A and B are not correct since individuals often have a good understanding of the fees and charges associated with using intermediaries, and intermediaries do not generally charge for services that customers do not value. Option D is also not correct since intermediaries tend to reduce transaction costs rather than raise them.

One Reason Financial Intermediaries Earn Profits Is Because