Why Are Banks Able to Offer Funds More Cheaply to Many

Multiple Choice

Why are banks able to offer funds more cheaply to many borrowers than can financial markets?

A) Banks tend to be willing to settle for lower profits than are other lenders.
B) Banks are less regulated than are financial markets, which lowers banks' costs of operating.
C) Banks specialize in gathering information on the creditworthiness of borrowers and monitoring borrowers' activities.
D) Financial markets are generally uninterested in making loans to small borrowers, because small borrowers usually cannot afford to pay the rates charged large corporations and other large borrowers.