There are two extreme views of financial innovation. Which of the below is ONE of these?

Question

Quizplus · Accepted Answer

One extreme view of financial innovation is that it is about introducing more efficient financial instruments for redistributing risks among market participants. This view sees financial innovation as a positive force that enhances a market's ability to allocate resources and manage risks. Option A is incorrect because it suggests that financial innovation involves introducing less efficient financial assets, which is not a view commonly held by proponents of financial innovation. Option B is also incorrect because while some financial innovations may have been motivated by a desire to circumvent regulations or minimize tax liability, this is not the only or even the primary impetus for innovation. Option D is incorrect because there are indeed two extreme views of financial innovation, as mentioned in the question stem.

There Are Two Extreme Views of Financial Innovation