Question

In: Finance

Why are there so many different financial intermediaries other than commercial banks? How does an investor’s...

Why are there so many different financial intermediaries other than commercial banks? How does an investor’s risk attitude and/or wealth play a role in his/her selection of a financial institution or intermediary?

Solutions

Expert Solution

Ans ) Financial intermediary : Financial intermediary is an institution or individual that serves as a middle men among diverse parties in order to facilitate the financial transactions.

There are so many financial intermediaries other than commercial banks :

Different financial intermediaries such as hedge fund , insurance company,etc operated in the same sense as commercial banks.financial system send fund from saver to borrower . borrower send return back to save through financial system.

there are different types of financial institution because there are different needs that people need . 1 )insurance companies are needed to pay for claim of their clients , pension are used for individual that are saving for retirement and invested into stocks and bonds ,and hedge fund are higher risk portfolio investment that used by mostly by wealthy .

Investors risk attitude play a role in the selection of financial intermediaries :

An investor that has wealth or a high risk attitude is more likely to choose a financial institutions that is going have greater return on their investment Even if it's high risk investment .

investors that are saving for the future or is limited in wealth is more likely to invest in a financial institutions that are safe and low risk .

??????? thanks .keep learning ,keep smiling


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