#1
Which of the following is NOT a financial intermediary?
Individual Investor
ExplanationIndividuals directly invest, bypassing intermediaries.
#2
What is the primary function of a financial intermediary?
To facilitate the flow of funds between savers and borrowers
ExplanationThey bridge the gap between savers and borrowers.
#3
Which of the following statements is true about financial intermediaries?
They help in the efficient allocation of savings in the economy
ExplanationThey optimize the allocation of funds within the economy.
#4
Which of the following is an example of a non-bank financial intermediary?
Pension Fund
ExplanationPension funds operate outside traditional banking.
#5
Which of the following best describes the function of a credit union?
To provide financial services to a specific group of people
ExplanationThey serve a targeted group with financial services.
#6
Which of the following is a function of a financial intermediary in the money market?
To facilitate the buying and selling of short-term debt securities
ExplanationThey enable trading of short-term debt instruments.
#7
Which of the following is a function of a financial intermediary in the capital market?
To facilitate the buying and selling of long-term securities
ExplanationThey aid in trading of long-term investment vehicles.
#8
What is the role of a stock exchange as a financial intermediary?
To facilitate trading of securities between buyers and sellers
ExplanationThey enable the exchange of securities.
#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.
ExplanationCommercial banks primarily lend, investment banks focus on securities.
#10
What is securitization?
A process of converting loans or other financial assets into securities
ExplanationTransforming assets like loans into tradable securities.
#11
What is the difference between a finance company and a bank?
Finance companies focus on providing loans for specific purposes, while banks offer a wider range of financial services.
ExplanationBanks offer diverse services; finance companies focus on loans.
#12
Which of the following is a function of financial intermediaries in the foreign exchange market?
To facilitate the buying and selling of foreign currencies
ExplanationThey enable trading of different currencies.
#13
Which of the following best describes the role of a financial intermediary in reducing information asymmetry?
By collecting and analyzing information about potential borrowers
ExplanationThey gather and analyze data to mitigate risk.