ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A mutual fund is a pool of money managed by an investment company that gathers money from individual investors and purchases a range of financial assets.

Detailed explanation-2: -A financial intermediary is a financial institution that collects funds from savers and then invests these funds in loans and other financial assets.

Detailed explanation-3: -savers to users are called financial intermediaries. They include commercial banks, savings banks, savings and loan associations, and such nonbank institutions as credit unions, insurance companies, pension funds, investment companies, and finance companies.

Detailed explanation-4: -Financial intermediaries are institutions that borrow funds from savers and lend them to borrowers, providing risk-sharing, liquidity, and information services in the process.

Detailed explanation-5: -Thus, banks act as financial intermediaries-they bring savers and borrowers together. An intermediary is one who stands between two other parties. Banks are a financial intermediary-that is, an institution that operates between a saver who deposits money in a bank and a borrower who receives a loan from that bank.