FNAN 321 Test 1: Multiple choice questions

Which of the following statements indicate the key function of financial institutions?

• Provide payment mechanisms

• Facilitate Asset transformation

• Provide brokerage services

• All of the above

Which one of the following financial institutions does involve in the implementation and transmission of monetary policy?

• Investment banks

• Commercial banks

• Credit unions

• Mutual funds

Which of the following depository financial institutions mainly focuses on mortgage loans?

• Saving banks

• Credit unions

• Finance companies

• Commercial banks

What type of loans do credit unions mainly provide?

• Consumer loans

• Real-estate loan

• Business loans

• Mortgage loans

Which of the following is not an asset held by Commercial Banks?

• Loans to corporations

• Current account deposits

• Investment in bonds

• Reserves with central bank

Banks' major income comes from

• Insurance premium

• They have less diversified assets

• Interest income

• All of the above

Which one of the following statements does not explain the specialness of Financial institutions?

• They pool assets to diversify risk

• They offer financial products which has better liquidity than directly investing in equity and bonds

• They collect and process information more efficiently

• None of the above

Which of the following is not a source of funding for finance companies?

• Deposits

• Bonds

• Bank

• Commercial papers

Suppose that you are currently unemployed, however, you spend your time by engaging yourself in painting and realistic sketching. You want to borrow 5000 Dirhams to build a painting studio in your house. You approached your bank for a 5,000 loan to buy tools that help you build an art corner at your house, but your bank has declined your application. Your friend advised you about Jais Finance that provides loan for individuals. What type of finance company is Jais Finance?

• Sales finance

• Personal finance

• Business finance

• Credit finance

You want to buy Lexus UX 200 2023 Premier on loan. You approached your bank for a 160,000 loan to buy the car. However, your bank has declined your application. Your friend advised you about an auto dealer that sells cars on loan. What type of finance company is the auto dealer? What type of finance company is the auto dealer?

• Personal finance

• Sales finance

• Business finance

• Credit finance