Asked by lovely cupcake on May 04, 2024
Verified
Which financial intermediary is not involved in the indirect method of financial intermediation?
A) Investment banks
B) Insurance companies
C) Mutual funds
D) Pension funds
Financial Intermediary
An institution that pools investors’ money and invests it on their behalf giving the investors shares of itself. Mutual funds are the primary example.
Indirect Method
A way of calculating cash flows from operations by starting with net income and adjusting for changes in non-cash accounts.
Investment Banks
Financial institutions that assist individuals, corporations, and governments in raising capital, advising on mergers and acquisitions, and providing other financial services.
- Recognize the types of financial intermediaries involved in direct and indirect financial intermediation.
Verified Answer
ZI
Zakiyyah IbrahimMay 07, 2024
Final Answer :
A
Explanation :
Investment banks are involved in the direct method of financial intermediation, where they help companies and governments issue securities to raise funds directly from investors. The other three options (insurance companies, mutual funds, and pension funds) are all involved in the indirect method of financial intermediation, where they collect funds from savers and then invest those funds in various financial assets.
Learning Objectives
- Recognize the types of financial intermediaries involved in direct and indirect financial intermediation.