Policy makers are particularly concerned about the financial soundness of financial intermediaries because
A)most financial assets are held by intermediaries.
B)troubles of intermediaries always receive the most publicity in the media.
C)the workings of intermediaries are easier for Congress to understand than are the workings of financial markets.
D)federal law applies to intermediaries but does not currently apply to financial markets.

Question

Quizplus · Accepted Answer

Financial intermediaries, such as banks and investment funds, hold a significant portion of financial assets. Therefore, their financial soundness is critical in maintaining the stability of the financial system as a whole. If these intermediaries were to become insolvent or fail, it could have significant negative consequences for the broader economy.

Policy Makers Are Particularly Concerned About the Financial Soundness of Financial