Which of the following statements is true?
A)While the financial system creates financial assets, it plays no role in increasing their liquidity.
B)While financial assets are not created by the financial system, the financial system provides ways of increasing their liquidity.
C)The financial system has little to do with either creating or increasing the liquidity of financial assets.
D)The financial system both creates financial assets and provides ways of increasing their liquidity.

Question

Quizplus · Accepted Answer

The statement that the financial system both creates financial assets and provides ways of increasing their liquidity is true. The financial system creates a variety of financial assets such as stocks, bonds, and derivatives, and it also provides markets, intermediaries, and other mechanisms through which these assets can be traded, transferred, and converted into cash or other forms of liquidity. Increasing liquidity is a key function of the financial system, as it enhances the efficiency and effectiveness of capital allocation, risk management, and economic growth.

Which of the Following Statements Is True