1. Financial intermediaries exist because small investors cannot efficiently _________.

A. diversify their portfolios

B. gather information

C. assess and monitor the credit risk of borrowers

D. all of the options

2. Just 2 months after you put money into an investment, its price falls 25%. Assuming that none of the investment fundamentals have changed, which of the following actions would evidence the greatest risk tolerance?

A. You sell to avoid further worry and buy something else.

B. You do nothing and wait for the investment to come back.

C. You buy more, thinking that if it was a good investment before, now it's not only good but cheap too.

D. You sue your financial adviser