Which of the following is TRUE regarding investment intermediaries? Group of answer choices Insurance companies can be both "buy side" and "sell side" institutions Investment bank s fund their assets primarily by selling shares A diversified portfolio of securities offers lower risk than a portfolio with investments that are concentrated in a few stocks or industries Commercial banks intermediate between Investors and Markets Investment banks have higher assets under management than Mutual Funds

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Answer:

A diversified portfolio of securities offers lower risk than a portfolio with investments that are concentrated in a few stocks or industries TRUE, A DIVERSIFIED PORTFOLIO WILL REDUCE RISK THROUGH DIVERSIFICATION, WHILE CONCENTRATION OF A FEW STOCKS INCREASES RISK.  

the other statements are false:

  • Insurance companies can be both "buy side" and "sell side" institutions. FALSE
  • Investment banks fund their assets primarily by selling shares FALSE
  • Commercial banks intermediate between Investors and Markets FALSE
  • Investment banks have higher assets under management than Mutual Funds FALSE

The statement that should be true for investment intermediaries is that when the portfolio is diversified so it offers less risk.

What is investment intermediaries?

It is treated as the mediator where the financial transactions should be executed. And, the same should be done between the two groups i.e. lenders and borrowers. Also, we know that when the portfolio is diversified so it offers less risk as compared to the investment that should be done in one stock only.

Therefore, all the other statements should be incorrect.

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