Financial markets are defined as situations where
A)net borrowers can lend their funds directly to net lenders.
B)net lenders can lend their funds directly to net borrowers.
C)net borrowers can lend their funds indirectly to net lenders.
D)contestable markets exist.

Question

Quizplus · Accepted Answer

Financial markets facilitate the transfer of funds between net lenders (those who have surplus funds to lend) and net borrowers (those who need funds). Therefore, net lenders can lend their funds directly to net borrowers in financial markets. Option B accurately describes this relationship. Options A and C are incorrect because in financial markets, net borrowers and net lenders do not lend funds to each other directly or indirectly. Option D is also incorrect as it does not align with the definition of financial markets.

Financial Markets Are Defined as Situations Where