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9. In this problem, circle the correct answer in each underlined grouping to complete the following statements. % point each. The financial system provides borrowers
9. In this problem, circle the correct answer in each underlined grouping to complete the following statements. % point each. The financial system provides borrowers and lenders a cost-effective way to reduce transportation/transaction costs and risk while enhancing their illiquidity/liquidity. The four primary types of financial institutions/financial assets are loans, bonds, stocks, and bank deposits. Loans are typically tailored to the needs of the borrower, which implies they will have high/low transactions costs. Central banks/Financial intermediaries are institutions that transform funds from many individuals into financial assets. A bond is a promise to repay the owners of the bond a specific amount at some point in the future plus yearly costs/interest/time value of money for the life of the bond. Bonds/Physical assets are easy to resell, which enhances their liquidity. Owning a share of stock in a given company is less risky/risker/risk-free than owning a bond from this same company. Stock ownership generally results in a high return for an investor than a bond, but it also carries higher/lower risk
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