ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Financial intermediaries offer the benefit of pooling risk, reducing cost, and providing economies of scale, among others.

Detailed explanation-2: -The three main roles of financial intermediaries include asset storage, loans, and investments. The main disadvantages of financial intermediaries include lower investment returns, mismatched goals, credit risk, and market risk.

Detailed explanation-3: -A financial intermediary is an institution or individual that serves as a middleman among diverse parties in order to facilitate financial transactions. Common types include commercial banks, investment banks, stockbrokers, pooled investment funds, and stock exchanges.

Detailed explanation-4: -Financial intermediaries mostly make their money from lending services. They capitalise on the interest rates of advanced short-term loans and long term loans. Banks have many depositors with a surplus of money. They use those funds to lend money to those in cash deficit.

Detailed explanation-5: -A financial intermediary refers to a third-party, forming environment for conducting financial transactions between different parties. For example, the banks accepting deposits from customers and lending them to the customers who need money exemplifies the basic financial intermediation process.