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Questions and Answers
What is the term used to describe the process of creating a new asset (loan) from liabilities (deposits) with different characteristics?
What is the term used to describe the process of creating a new asset (loan) from liabilities (deposits) with different characteristics?
- Asset allocation
- Deposit intermediation
- Liability transformation
- Asset transformation (correct)
Which type of financial intermediary channels deposits from depositors to borrowers?
Which type of financial intermediary channels deposits from depositors to borrowers?
- Banks (correct)
- Finance companies
- Bond markets
- Stock markets
What is the predominant source of financing for individuals and companies worldwide?
What is the predominant source of financing for individuals and companies worldwide?
- Finance companies
- Bank loans (correct)
- Stock markets
- Bond markets
What feature distinguishes bank deposits from bank loans in terms of size and risk?
What feature distinguishes bank deposits from bank loans in terms of size and risk?
What do governments create to protect depositors against bank failures?
What do governments create to protect depositors against bank failures?
What is the main activity of banks mentioned in the text?
What is the main activity of banks mentioned in the text?
What is the primary source of revenue and profit for a bank?
What is the primary source of revenue and profit for a bank?
What do depositors assume about their deposits with a bank?
What do depositors assume about their deposits with a bank?
What does a bank do with the deposits it receives from depositors?
What does a bank do with the deposits it receives from depositors?
What is the primary concern for depositors as mentioned in the text?
What is the primary concern for depositors as mentioned in the text?
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