Which of the following statements about financial institutions is true?: An investment company’s primary source of...

Which of the following statements about financial institutions is true?:

An investment company’s primary source of funds is loans and its primary use of funds is securities

An investment company’s primary source of funds is shares and its primary use of funds is loans

Stock funds or equity funds involve more risk than money market or bond funds.

An insurance company’s primary source of funds is deposits and its primary use of funds is loans

A commercial bank’s primary source of funds is debt and its primary use of funds is securities

Solutions

Expert Solution

Correct answer is "Stock funds or equity funds involve more risk than money market or bond funds."

Stock funds or equity funds are those mutual funds which invest the money in to equity shares and hence provides faster and greater returns than the bond funds or money market funds which invest in the fixed income securities. Since, the prices of equity shares are volatile and tend to fluctuate more, there are higher risk of losing money.

jeff jeffy answered 1 year ago

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