Financial intermediaries transfer financial assets that are less desirable into other financial assets, which are more widely preferred by the public. This transformation involves which of the following economic functions?

Question

Quizplus · Accepted Answer

Financial intermediaries perform all the listed functions: they provide maturity intermediation by transforming short-term liabilities into long-term investments; they reduce risk through diversification; they lower the costs associated with contracting and processing information; and they offer mechanisms for making payments.

Financial Intermediaries Transfer Financial Assets That Are Less Desirable into Other