Financial Institutions, Instruments and Markets 9th Edition by Christopher Viney Test bank

C. Direct finance allows greater flexibility in funding types.
D. Direct finance reduces search and transactions costs.
Ans: D
AACSB: Reflective thinking
Bloom's: Synthesis
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
51. Financial intermediaries:
A. act as a third party by holding a portfolio of assets and issuing claims based on them to savers.
B. issue claims on future cash flows of individual borrowers directly to lenders.
C. transmit funds directly between lenders and borrowers.
D. usually provide lenders with lower returns than other financial institutions.
Ans: A
AACSB: Reflective thinking
Bloom's: Synthesis
Difficulty: Hard
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
52. The flow of funds between lenders and borrowers is channelled:
A. indirectly through financial markets.
B. directly through financial intermediaries.
C. indirectly through financial intermediaries.
D. mainly through government agencies.
Ans: C
AACSB: Reflective thinking
Bloom's: Knowledge
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
53. ‘Intermediaries, by managing the deposits they receive, are able to make long-term loans while satisfying savers' preferences for liquid claims.' This statement is referring to which important attribute of financial intermediation?
A. Asset transformation
B. Maturity transformation
C. Credit risk transformation
D. Denomination transformation
Ans: B
AACSB: Reflective thinking
Bloom's: Synthesis
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
54. The main role of financial intermediaries is to:
A. borrow funds from surplus units and lend them to borrowers.
B. provide advice to consumers on their finances.
C. provide funds for the government to cover budget deficits.
D. help ensure there are enough funds in circulation in a country.
Ans: A
AACSB: Reflective thinking
Bloom's: Synthesis
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
55. Financial intermediaries pool the funds of:
A. many small savers and make loans to a few large borrowers.
B. a few savers and make loans to many borrowers.
C. many small savers and make loans to many borrowers.
D. a few large savers and make loans to a few large borrowers.
Ans: C
AACSB: Reflective thinking
Bloom's: Evaluation
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
56. Small savers prefer to use financial intermediaries rather than lending directly to borrowers because:
A. financial intermediaries offer the savers a wide portfolio of financial instruments.
B. financial intermediaries offer much higher interest rates than can be obtained directly from borrowers.
C. borrowers dislike dealing with savers.
D. savers have a claim with the ultimate borrower via the financial intermediary.
Ans: A
AACSB: Reflective thinking
Bloom's: Synthesis
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets