A financial institution
A) is a firm that lends only to governments.
B) is a firm that issues shares in companies.
C) is a firm that borrows from governments
D) is a firm that borrows in one market and lends in another.
E) None of the above

Question

Quizplus · Accepted Answer

Financial institutions often operate by borrowing funds in one market (e.g., through deposits or short-term borrowing) and lending those funds in another market (e.g., through loans, mortgages, or other financial products). This process is fundamental to their role in the financial system, facilitating the flow of funds from savers to borrowers.

A Financial Institution