Financial Institutions and Intermediation
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Questions and Answers

What is the primary role of financial intermediaries?

  • To regulate financial transactions on the market
  • To invest in financial assets on their own account
  • To channelize funds from lenders to borrowers (correct)
  • To provide financial advice to lenders
  • What is financial intermediation?

  • A productive activity that incurs liabilities to acquire financial assets (correct)
  • A type of financial institution that provides advisory services
  • A type of financial transaction that occurs only in the market
  • A process of lending and borrowing directly
  • What is a financial establishment primarily engaged in?

  • Regulating financial transactions on the market
  • Financial intermediation and auxiliary financial activities (correct)
  • Providing financial advice to borrowers
  • Investing in financial assets on its own account
  • What do financial intermediaries do to facilitate financial transactions?

    <p>They intermediate between lenders and borrowers</p> Signup and view all the answers

    What is the outcome of financial intermediation?

    <p>The channeling of funds from lenders to borrowers</p> Signup and view all the answers

    Study Notes

    Financial Establishment

    • A financial establishment is a type of servicing establishment that primarily engages in financial intermediation or auxiliary financial activities closely related to financial intermediation.

    Financial Intermediation

    • Financial intermediation is a productive activity where an institutional unit incurs liabilities to acquire financial assets through market transactions.
    • The primary goal of financial intermediation is to channel funds from lenders to borrowers.

    Role of Financial Intermediaries

    • Financial intermediaries play a crucial role in facilitating transactions between lenders and borrowers.

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    Description

    This quiz covers the concept of financial establishments, including their role in financial intermediation and auxiliary activities related to financial transactions.

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