Question

How an investor’s risk attitude and/or wealth play a role on his/her selection of a financial institution or intermediary, and how an investor seeking a moderate return on investment would select a financial institution or intermediary.

Answer 1

An investor's risk attitude or wealth plays a very important role in the selection of financial intermediary. If an investor has a high risk attitude or high wealth, will choose an intermediary which will provide him higher return rven if the investment is risky. Investors who are looking to secure their future will look for intermediaries that is safe and low risky.

An investor seeking a moderate return should look for intermediaries which provide low risk, low transaction cost and a moderate return on the investment. For eg:- Mutual funds. A mutual fund reduces the transaction cost and also diversifies the fund , making it less risky and generate a moderate return on the investment.