Financial Intermediaries

B

Financial intermediaries are institutions or individuals that act as a link between lenders and borrowers, facilitating the transfer of funds from one party to another. They play a crucial role in the economy by mobilizing savings and channeling them towards productive investment opportunities.

Option B is the correct answer. Insurance companies and pension funds are examples of financial intermediaries. These institutions collect funds from individuals and invest them in a portfolio of assets, such as stocks, bonds, and real estate, with the aim of generating returns that can be used to pay claims or fund retirement benefits.

Option A is incorrect. Financial intermediaries do invest in long-term securities, among other types of assets, as part of their investment strategy. However, the nature and extent of their investment activities depend on various factors, such as their risk appetite, regulatory constraints, and market conditions.

Option C is also incorrect. The national and regional stock exchanges are not financial intermediaries but rather platforms where buyers and sellers of securities can meet and trade. They play a critical role in providing liquidity and transparency to the market, but they do not intermediate the transfer of funds between lenders and borrowers.

Option D is also incorrect. Underwriting syndicates are groups of investment banks that work together to underwrite and distribute securities offerings. They help issuers raise capital by buying securities from them and selling them to investors. However, they are not financial intermediaries in the traditional sense since they do not channel funds from savers to borrowers.

In summary, financial intermediaries are institutions or individuals that facilitate the transfer of funds from savers to borrowers. They include insurance companies and pension funds, among others, and invest in a range of assets, including long-term securities.