Financial markets provide the mechanism for allocating financial resources or funds from savers to borrowers.

Question

Quizplus · Accepted Answer

Financial markets allow individuals and institutions with excess funds (savers) to invest those funds by purchasing financial assets, such as stocks or bonds, and thus provide additional funds to those who need them (borrowers). This mechanism of allocation is the primary function of financial markets.

Financial Markets Provide the Mechanism for Allocating Financial Resources or Funds