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Questions and Answers
What is a characteristic of depository institutions according to the text?
What is a characteristic of depository institutions according to the text?
- Buy securities at low prices
- Accept deposits and issue contracts (correct)
- Primarily offer life insurance
- Issue contracts but not deposits
What characterized the New Financial Environment (NFE)?
What characterized the New Financial Environment (NFE)?
- Fixed rates on assets
- Highly specialized financial system
- Short-term loans only
- Market-determined rates on assets (correct)
What type of banks were set up in the Old Financial Environment (OFE)?
What type of banks were set up in the Old Financial Environment (OFE)?
- Universal banks
- Savings and mortgage banks
- Commercial banks granting short-term loans (correct)
- Rural banks investing low
Which type of financial institution falls under non-depository institutions category?
Which type of financial institution falls under non-depository institutions category?
What is the main risk associated with financial intermediation according to the text?
What is the main risk associated with financial intermediation according to the text?
What differentiates the activities in the Old Financial Environment from the New Financial Environment?
What differentiates the activities in the Old Financial Environment from the New Financial Environment?
What is the primary role of financial intermediaries?
What is the primary role of financial intermediaries?
How do financial intermediaries differ from market specialists or brokers?
How do financial intermediaries differ from market specialists or brokers?
What distinguishes direct finance from indirect finance?
What distinguishes direct finance from indirect finance?
When a bank issues checking accounts or time deposit certificates to depositors, what type of finance is it considered?
When a bank issues checking accounts or time deposit certificates to depositors, what type of finance is it considered?
Which financial institution may underwrite certain original issues according to the text?
Which financial institution may underwrite certain original issues according to the text?
Why do financial intermediaries issue their own financial instruments called secondary securities?
Why do financial intermediaries issue their own financial instruments called secondary securities?
What type of financial intermediaries are market specialists?
What type of financial intermediaries are market specialists?
In indirect finance, what is the role of financial intermediaries?
In indirect finance, what is the role of financial intermediaries?
What distinguishes old simple financial intermediaries from modern ones?
What distinguishes old simple financial intermediaries from modern ones?
How do market specialists differ from traditional financial intermediaries?
How do market specialists differ from traditional financial intermediaries?
What is the primary function of market specialists?
What is the primary function of market specialists?
How does indirect finance differ from direct finance?
How does indirect finance differ from direct finance?
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