Which of the following statements illustrates an example of how financial institutions' role as specialists in risk measurement and management is reduced.

Multiple Choice

Neither statement is correct.

Both statements are correct.

Once financial institutions have lent money in exchange for financial claims, fund suppliers would need to monitor the use of their funds to guard against theft and waste.

Many financial claims feature a long$-$term commitment for fund suppliers, creating a disincentive for fund suppliers to hold direct financial claims that fund users may issue.