Firms that act as financial intermediaries match households that have excess funds with firms that want to borrow funds. What other key services does the financial system provide to savers & lenders?

a. provides an easy method of exchanging a financial security for moneyb. allows savers to spread their money among many financial investmentsc. collects & communicates information about borrowers to savers

All options are correct:

A) provides an easy method of exchanging a financial security for money

B) allows savers to spread their money among many financial investments

C) collects & communicates information about borrowers to savers

Explanation:

Imagine you own US securities (bonds) that your grandmother gave to you, and you decide it's time to cash your investment. You can go to your bank and they will provide the services you need to exchange your treasury bonds for money.

If banks didn't exist, and you wanted to earn some interest for some extra money you have, you would to go looking for someone who needs to borrow money. Besides being a difficult task, the risk that your single borrower doesn't pay you bank is very high. That risk is diversified by the bank since it has thousands or millions of clients.

If you are a bank's client that deposits money or has a CD, the bank can also provide information about other investment opportunities that may be available for you, e. g. corporate bonds.