18 Questions
What is the primary function of Ford Motor Credit Company mentioned in the text?
Lending to consumers for purchasing Ford cars
Which type of financial intermediary borrows funds from lenders and then lends the funds to borrowers?
Investment banks
Direct finance involves funds flowing directly from _____________ to borrowers in the financial markets.
Lenders
What is the key reason for the need of financial intermediaries as mentioned in the text?
To minimize transaction costs
Which concept refers to the problem of hidden information that can lead to adverse outcomes in transactions?
Adverse selection
What type of funds acquire funds from individual investors and purchase diversified portfolios of stocks and bonds?
Bond Funds
In indirect finance, a financial intermediary borrows funds from lenders to ____________.
Make loans to borrowers
'Economies of scope' mentioned in the text refer to the benefit of ____________.
Diversifying services provided
What is the primary source of fee income for banks mentioned in the text?
Foreign exchange trades for customers
Which of the following is NOT listed as a trading activity or risk management technique for banks?
Mortgage-backed securities
What does the formula $\frac{\text{net income}}{\text{assets}}$ represent?
Return on Assets (ROA)
Which of the following is NOT one of the objectives mentioned in the text?
Discuss the impact of banking regulations on bank performance
Which of the following formulas represents the Net Interest Margin (NIM)?
$\frac{\text{interest income} - \text{interest expenses}}{\text{assets}}$
Which of the following activities is NOT considered an off-balance sheet activity for banks?
Servicing mortgage-backed securities
Which of the following references is focused on the role of banks in the market for liquidity?
Garber, P.M., & Weisbrod, S.(1990). Banks in the Market for Liquidity.
What does the formula $\frac{\text{net income}}{\text{capital}}$ represent?
Return on Equity (ROE)
Which of the following references is focused on the microeconomics of banking?
Freixas, X., & Rochet, J.C.(2008). Microeconomics of banking. MIT press. Page 30-43.
Which of the following activities is NOT listed as a source of fee income for banks?
Trading financial derivatives
Explore the basics of debt markets focusing on debt instruments and their characteristics like interest payments and maturity dates. Learn about equity markets and their role in financial markets.
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