Due to the costs of monitoring, liquidity and price risk savers often prefer to hold the financial claims issued by FIs rather than those issued by corporations.

Question

Quizplus · Accepted Answer

FIs, such as banks and insurance companies, are typically subject to more regulations and oversight than corporations, which can provide a greater sense of security to savers. Additionally, FIs may offer more liquid and standardized financial products than corporations, which can make them more attractive to savers.

Due to the Costs of Monitoring, Liquidity and Price Risk