Financial markets serve as the
A) primary source of funds for financial intermediaries.
B) means of converting cash into tangible assets.
C) transmission mechanism between savers and borrowers.
D) economic system's ultimate source of funds.

Question

Quizplus · Accepted Answer

Financial markets serve as the mechanism between savers (who supply funds) and borrowers (who demand funds). Through financial markets, savers can invest their funds and earn a return, while borrowers can access the capital they need to finance their activities. They serve as a platform for trading different types of financial instruments, such as stocks, bonds, and derivatives. While financial intermediaries (such as banks and investment funds) do play a role in the financial system, they ultimately rely on financial markets to acquire the funds they need to operate.

Financial Markets Serve as the