uueson 4 (1 point) Intermediaries play the most significant role in moving funds

Question

uueson 4 (1 point) Intermediaries play the most significant role in moving funds from deficit units to surplus units except when the deficit units, are large and report their financial condition publicly. are less transparent and there is a benefit to hard-to-gather information, are more opaque so that non-public information is more important for risk assessment. are small so the relative costs of gathering information about them are relatively large, are complex and analytical skills are required for understanding the deficit unit. Save

Explanation / Answer

Intermediaries play the most significant role in moving funds from deficit units to surplus units except when the deficit units:

a) are large and report their financial condition publicly.

Intermediaries perform an important role in moving funds from deficit untits to surplus units. Intermediaries can perform this function because of the presence of large information asymmetries.

But, when these units report their financial condition publicly, asymmetries are removed, thus leaving no oppourtunity for the intermediaries to gain a uper hand.

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