Financial intermediaries emerged
A)to make loans to governments.
B)to provide a market for municipal bonds.
C)to reduce transactions costs for small savers and borrowers.
D)to reduce transactions costs for traders in stocks and bonds.

Question

Quizplus · Accepted Answer

Financial intermediaries such as banks, credit unions, and mutual funds are created to pool together the savings of many small savers and lend them out to borrowers, providing a way to reduce the costs of financial transactions. This benefits both savers and borrowers by allowing smaller amounts of money to be lent and invested while still making it profitable for the intermediary. The other choices are not accurate descriptions of the purpose of financial intermediaries.

Financial Intermediaries Emerged