Which of the following is a primary function of financial intermediaries?
Issuing currency
Regulating interest rates
Providing liquidity
Enforcing tax laws
#2
What does the term 'market dynamics' refer to in finance?
The study of consumer behavior
Changes in supply and demand
Government regulations on trade
The study of inflation rates
#3
Which of the following is a characteristic of a financial intermediary?
Directly investing in stocks
Providing loans to individuals
Issuing government bonds
Setting monetary policy
#4
What role do investment banks play in financial markets?
Facilitating trading of stocks and bonds
Providing insurance services
Regulating commodity markets
Enforcing accounting standards
#5
What is the primary function of a commercial bank in financial intermediation?
Issuing government bonds
Providing investment advice
Accepting deposits and granting loans
Regulating interest rates
#6
In financial markets, what is the term 'arbitrage' commonly associated with?
Speculation on future prices
Exploiting price differences for profit
Regulating stock exchanges
Investment in emerging markets
#7
Which of the following is NOT considered a financial intermediary?
Mutual fund
Insurance company
Stock exchange
Pension fund
#8
Which theory suggests that financial intermediaries exist because they can provide better risk management and information services than individuals acting alone?
Efficient market hypothesis
Transaction cost theory
Liquidity preference theory
The theory of financial intermediation
#9
What does the term 'leverage' mean in financial contexts?
Increasing the proportion of debt in a company's capital structure
Minimizing risk through diversification
Maximizing profits through aggressive trading
Restricting the flow of capital
#10
What is the role of securitization in financial intermediation?
Pooling assets to create new financial instruments
Regulating interest rates
Issuing government bonds
Facilitating foreign exchange transactions
#11
What is the significance of the efficient market hypothesis (EMH) in financial theory?
It suggests that markets are always efficient and prices reflect all available information
It advocates for government intervention in financial markets
It promotes speculative trading strategies
It suggests that markets are prone to frequent bubbles and crashes