A student remarks:

When I pay my insurance premiums, I never get that money back. My insurance premiums represent

payments for a service I receive from the insurance company. When I deposit money in the bank, I can

always withdraw the money later if I want to. So, my bank deposit represents a financial investment for

me. Therefore, a bank is a financial intermediary, but an insurance company is not.

Explain whether the student's argument is correct or incorrect.

A. The argument is correct because insurance companies specialize in contracts to protect their policyholders from the risk of financial loss. Since insurance companies provide only a service, they cannot be considered a financial intermediary.

B. The argument is incorrect because insurance companies specialize in contracts to protect their policyholders from the risk of financial loss. Insurance companies channel funds from savers to borrowers, which makes them a financial intermediary.

C. The argument is correct because banks borrow funds from savers and lend the funds to borrowerslong dash

a service that distinguishes them as a financial intermediary.

D. The argument is incorrect because policyholders always have the option to cancel the insurance policylong dash

essentially

allowing them to withdraw funds, which would make an insurance company a financial intermediary.