Financial intermediaries issue their own indirect securities and use the proceeds to purchase the direct securities of other economic units.

Question

Quizplus · Accepted Answer

This statement is true. Financial intermediaries, such as banks and mutual funds, issue their own securities (such as stocks or bonds) to raise funds from investors. They then use these funds to purchase direct securities, such as stocks or bonds, issued by other economic units like corporations or governments. This allows them to pool funds from many individual investors and create diversified portfolios of investments.

Financial Intermediaries Issue Their Own Indirect Securities and Use the Proceeds