Podcast
Questions and Answers
What is the primary role of Financial Institutions (FIs) as asset transformers?
What is the primary role of Financial Institutions (FIs) as asset transformers?
- Issuing primary securities to corporations
- Purchasing secondary securities from households
- Purchasing primary securities from corporations (correct)
- Issuing secondary securities to households
How do Financial Institutions (FIs) reduce information costs for investors?
How do Financial Institutions (FIs) reduce information costs for investors?
- By avoiding interactions with borrowing firms
- By increasing agency costs for savers
- By effectively managing agency costs (correct)
- By exposing principals to agent actions
In what way do Financial Institutions (FIs) encourage a higher rate of savings?
In what way do Financial Institutions (FIs) encourage a higher rate of savings?
- By offering financial claims more attractive to household savers (correct)
- By issuing corporate equity directly
- By purchasing primary securities from households
- By avoiding the issuance of insurance policies
What benefit do household savers gain from purchasing secondary securities from Financial Institutions?
What benefit do household savers gain from purchasing secondary securities from Financial Institutions?
How do Financial Institutions (FIs) reduce transaction costs through economies of scale?
How do Financial Institutions (FIs) reduce transaction costs through economies of scale?
What distinguishes secondary securities sold by Financial Institutions to households from primary securities issued by corporations?
What distinguishes secondary securities sold by Financial Institutions to households from primary securities issued by corporations?
What type of money does the central bank directly control in the economy?
What type of money does the central bank directly control in the economy?
Which type of money supply is predominantly controlled by deposits within the economy?
Which type of money supply is predominantly controlled by deposits within the economy?
What is the primary purpose of reserve requirements in facilitating monetary policy transmission?
What is the primary purpose of reserve requirements in facilitating monetary policy transmission?
Which regulation aims to support socially important sectors like housing and farming?
Which regulation aims to support socially important sectors like housing and farming?
In the US, what test requires a significant percentage of assets to be held in residential mortgages or approved loans?
In the US, what test requires a significant percentage of assets to be held in residential mortgages or approved loans?
Which type of regulations set limits on loan interest rates, aiming to prevent excessive charges?
Which type of regulations set limits on loan interest rates, aiming to prevent excessive charges?
How do banks and thrifts reduce liquidity and price risk for small investors?
How do banks and thrifts reduce liquidity and price risk for small investors?
What allows financial institutions to reduce information costs through economies of scale?
What allows financial institutions to reduce information costs through economies of scale?
In what way do FIs reduce liquidity and price risk with their secondary claims?
In what way do FIs reduce liquidity and price risk with their secondary claims?
What is one of the benefits of diversifying investment portfolios for financial institutions?
What is one of the benefits of diversifying investment portfolios for financial institutions?
Which factor contributes to financial institutions being able to allocate credit to areas of special need like home mortgages?
Which factor contributes to financial institutions being able to allocate credit to areas of special need like home mortgages?
What role do payment services like FedWire and CHIPS play in the special roles of financial institutions?
What role do payment services like FedWire and CHIPS play in the special roles of financial institutions?
