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What is a major risk of using a financial institution?

A. The financial institution may fail entirely
B. Financial institutions may choose not to pay investors back
C. Investors can be unable to withdraw money when they need it
D. Insurance will not cover any losses incurred by a financial institution

1 answer

A major risk of using a financial institution is:

A. The financial institution may fail entirely

While options B, C, and D present valid concerns in certain contexts, the complete failure of a financial institution encapsulates several potential risks including loss of deposits, inability to access funds, and possibly not being covered by insurance depending on the circumstances and regulation.