Quiz 1 for Seminar

The main function of banks is

• To collect funds (deposits) from surplus untis and lend funds (loans) to deficit units

• buy primary securities and sell secondary securities

• buy from brokers and dealers and sell to the public

• none of the above

• borrow in small denominations and lend in large

Which mechanism has developed demand deposits to control banks' risk aversion because changes in demand and demand for these instruments will be reflected in financing costs and these disciplines, or have forced banks to exercise caution?

• consumption smoothing

• A commitment mechanism

• information production

• Liquidity mechanism

• Risk transformation

Transaction costs associated with the lending process are likely to be reduced significantly, especially where straightforward deposit facilities are utilized. This idea can be attributed to:

• The benefits of ultimate lenders

• The benefits of society as a whole

• The benefits for investors

• The benefits of ultimate borrowers

• All of above

Which of the bank types' main aim is to help government raise funds in the financial market?

• E-commerce

• Private banking

• Commercial bank

• Investment banking

• Internet banking

__________are instructions from the customer (account holder) to the bank to pay a fixed amount at regular intervals into the account of another individual or company.

• Standing orders

• Credit cards

• Credit transfers

• Plastic cards

• Direct debits

Central banks can serve as a lender of last resort because:

• banks are more likely to borrow money from their depositors during a financial panic

• they are the only financial institution that is legally allowed to make loans during a financial panic

• they have the ability to create money to stimulate banks

• because only the central bank has the opportunity to lend at lower interest rates and in larger amounts

• the interest rates they charge are so high that banks are virtually never willing to borrow from the central bank

The majority of __________ revenue came from lending activities, which included accepting deposits and issuing loans.

• Traditional banking

• Modern banking

• Classic banking

• International banking

• Universial banking

A borrower's interest rate can be determined using which of the following?

• credit amount

• credit availability from the bank

• repayment schedules

• Credit score

• Loan terms

The type of bank account in which the deposited amount cannot be withdrawn before the maturity of the term is.

• Transaction account

• Time/fixed deposit account

• Current bank account

• Nostro account

• MMDA deposit account

If a bank has deposits of $100,000, loans of $75,000, cash on hand of $10,000, and $12,000 on deposit at the Central Bank, then its reserve ratio is:

• 5%

• 1%

• 10%

• 12%.

• 15%