Financial Intermediaries and the Allocation of Savings Quiz
Test your knowledge on financial intermediaries' roles, functions, and types. Dive into banking, capital, and commodity markets!
#1
Which of the following is NOT a financial intermediary?
Bank
Stock Exchange
Mutual Fund
Individual Investor
#2
What is the primary function of a financial intermediary?
To facilitate the flow of funds between savers and borrowers
To provide financial advice to individuals
To regulate the financial markets
To minimize risk in financial transactions
#3
Which of the following statements is true about financial intermediaries?
They only deal with individual investors
They do not take any risk in their operations
They help in the efficient allocation of savings in the economy
They are not regulated by any authority
#4
Which of the following is an example of a non-bank financial intermediary?
Commercial Bank
Pension Fund
Insurance Company
Central Bank
#5
Which of the following best describes the function of a credit union?
To issue credit cards
To provide financial services to a specific group of people
To regulate the banking industry
To invest in the stock market
#6
Which of the following is a function of a financial intermediary in the money market?
To facilitate the buying and selling of long-term securities
To provide short-term loans to individuals
To facilitate the buying and selling of short-term debt securities
To provide long-term financing to corporations
#7
Which of the following is a function of a financial intermediary in the capital market?
To provide short-term financing to individuals
To facilitate the buying and selling of long-term securities
To provide long-term financing to corporations
To facilitate the buying and selling of short-term debt securities
#8
What is the role of a stock exchange as a financial intermediary?
To provide loans to individuals
To facilitate trading of securities between buyers and sellers
To offer insurance services
To manage retirement funds
#9
What is the main difference between a commercial bank and an investment bank?
Commercial banks focus on providing loans, while investment banks focus on underwriting and issuing securities.
Commercial banks only deal with corporate clients, while investment banks deal with individual investors.
Commercial banks are privately owned, while investment banks are government-owned.
Commercial banks are not involved in the stock market, while investment banks are heavily involved.
#10
What is securitization?
A process of issuing new shares of a company
A process of converting loans or other financial assets into securities
A process of merging two financial institutions
A process of transferring ownership of a financial asset
#11
What is the difference between a finance company and a bank?
Finance companies are more heavily regulated than banks.
Finance companies cannot accept deposits from the public.
Finance companies focus on providing loans for specific purposes, while banks offer a wider range of financial services.
Finance companies are owned by the government, while banks are privately owned.
#12
Which of the following is a function of financial intermediaries in the foreign exchange market?
To provide short-term financing to individuals
To facilitate the buying and selling of foreign currencies
To provide long-term financing to corporations
To facilitate the buying and selling of stocks and bonds
#13
Which of the following best describes the role of a financial intermediary in reducing information asymmetry?
By providing a platform for direct transactions between savers and borrowers
By collecting and analyzing information about potential borrowers
By guaranteeing the performance of financial contracts
By offering financial advice to individual investors
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