Which one of the following is not a financial intermediary?
A. Security dealers
B. Insurance companies
C. Real estate investment trusts
D. Pension funds
D?
No.
http://www.investopedia.com/terms/f/financialintermediary.asp
Check your text materials. According to the website above, all of those are financial intermediaries.
Yes, that's correct. Pension funds are not considered financial intermediaries. They are vehicles that hold and invest money on behalf of individuals or companies to provide income in retirement. While they do involve financial transactions, pension funds do not intermediate between savers and borrowers like traditional financial intermediaries do.
Yes, you are correct, pension funds are not considered to be financial intermediaries. To determine this, we can analyze the characteristics of financial intermediaries and compare them to the features of pension funds.
Financial intermediaries are institutions or entities that connect surplus units (savers) with deficit units (borrowers). They serve as intermediaries in the transfer of funds between these two groups. They perform functions such as pooling funds from savers, providing credit to borrowers, and managing risks.
Looking at the options given:
A. Security dealers: These are financial intermediaries that facilitate the buying and selling of securities (e.g., stocks, bonds) between buyers and sellers.
B. Insurance companies: Insurance companies provide financial protection to policyholders in exchange for premiums. They collect funds from policyholders and invest them to generate returns. They also transfer risks from individuals to the broader pool of policyholders.
C. Real estate investment trusts (REITs): REITs are financial intermediaries that pool funds from investors to invest in income-generating real estate properties. They provide a way for individual investors to participate in the real estate market.
D. Pension funds: Pension funds, on the other hand, are not considered financial intermediaries. They are a type of institutional investor that manages funds contributed by employers and/or employees for retirement purposes. Pension funds invest these funds to generate returns that will provide retirement income for beneficiaries. However, they do not perform the functions of pooling funds from savers or providing credit or risk management services.
Therefore, D, pension funds, is the correct answer as it is not classified as a financial intermediary.