If financial intermediation were substantially reduced, the likely initial effect on individual investors would be
A) higher inflation.
B) a shift to a barter economy.
C) a reduction in disintermediation.
D) increased risk.

Question

Quizplus · Accepted Answer

Financial intermediation provides a level of risk reduction for individual investors by pooling funds and diversifying investments. If financial intermediation were substantially reduced, investors would have to rely more heavily on their own ability to assess and manage risk, potentially resulting in increased risk for individual investors.

If Financial Intermediation Were Substantially Reduced, the Likely Initial Effect