Financial markets enable the transfer of risk by:

Question

Quizplus · Accepted Answer

Financial markets allow investors who are less willing to bear risk to transfer that risk to other investors who are more willing to bear risk. This is usually accomplished through the buying and selling of various financial instruments such as stocks, bonds, and options. By transferring risk, individuals and firms can manage their exposure to risk and potentially reduce their losses in the event of an adverse market event.

Financial Markets Enable the Transfer of Risk By