high-risk investment is one for which a wide range of potential payoffs is reasonably probable. A low-risk

investment may have actual returns that are fairly close to its expected rate of return year after year. A high-

risk investment will have actual returns that are much higher than the expected rate of return in some months

or years and much lower in other months or years. The actual rate of return refers to the total rate of return,

including capital gains and interest paid on an investment at the end of a time period.

Bank Accounts

An intermediary is one who stands between two other parties. For example, a person who arranges a blind

date between two other people is one kind of intermediary. In financial capital markets, banks are an example

of a financial intermediary—that is, an institution that operates between a saver who deposits funds in a bank

and a borrower who receives a loan from that bank. When a bank serves as a financial intermediary, unlike the
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