Since one function of financial intermediaries is to provide liquidity:

Question

Quizplus · Accepted Answer

Financial intermediaries must know the approximate amount of liquidity their customers will need each day and have these funds available. This allows them to meet the demands of their customers and maintain liquidity for themselves, without holding excessive amounts of cash or securities. Option A is not accurate because holding all funds in short-term securities would limit their liquidity. Option B is also not accurate because financial intermediaries do not keep almost all of their funds in cash, as this would be inefficient and offer low returns. Option D is not accurate because there are no such universal regulations requiring financial intermediaries to keep 50% of their assets in cash.

Since One Function of Financial Intermediaries Is to Provide Liquidity