Answer (A) is correct . Financial intermediaries increase the efficiency of financial markets. A financial intermediary is a specialized firm that obtains funds from savers, issues its own securities, and uses the money to purchase a business’s securities. Accordingly, they create new forms of capital. Mutual funds are corporations that use funds from savers to invest in stocks, long-term bonds, or short-term debt.
Answer (B) is incorrect because Money markets are the supply and demand of debt securities with maturities of less than 1 year.
Answer (C) is incorrect because The New York Stock Exchange is a capital market that trades long-term debt and equity securities.
Answer (D) is incorrect because The over-the-counter market is a secondary capital market that trades securities not traded on the stock exchanges.
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