An economic rationale for government protection of small investors is that:
A) large investors can better afford losses.
B) many small investors cannot adequately judge the soundness of their bank.
C) there is inadequate competition to ensure a bank is operating efficiently.
D) banks are often run by unethical managers who will often exploit small investors.

Question

Quizplus · Accepted Answer

Small investors may not have the financial knowledge or resources to adequately evaluate the soundness of a bank or investment opportunity. Government protection can provide oversight and regulation to ensure that small investors are not taken advantage of or subject to fraudulent activities. This helps to promote confidence in the financial system and encourages small investors to participate in the market.

An Economic Rationale for Government Protection of Small Investors Is