Financial Institutions, Systems, and Instruments

What is the main objective of the financial system?

• Provide free financial services to all individuals

• Control and regulate the flow of money

• Promote competition among financial institutions

• Facilitate saving, borrowing, lending, and investing activities

Which of the following is not an element of a financial system?

• Financial instruments

• Financial advisors

• Financial markets

• Financial institutions

What is the role of depository institutions in the financial system?

• Act as financial advisors

• Provide insurance services only

• Regulate the financial markets

• Accept deposits, extend loans, transfer funds, and manage investments

Which type of bank is considered the biggest in terms of assets and revenues?

• Thrift Bank

• Rural Bank

• Commercial Bank

• Universal Bank

What is the main purpose of a Savings and Loan Association?

• Act as a fiduciary agent

• Provide work capital to businesses

• Extend credit to members

• Accumulate savings and invest in securities

Which of the following is a type of financial intermediary?

• Mutual Funds

• Trust Companies

• Banks

• Credit Unions

What is the function of a Primary Market in the financial system?

• Provide insurance products

• Facilitate trading of securities between investors

• Issue new shares of stock by corporations

• Trade short-term securities

Which financial instrument represents a contractual debt of the issuing party?

• Stock

• Cash

• Check

• Loan

What type of bond is secured by collateral from the issuing company?

• Debenture bond

• Secured bond

• Serial bond

• Term bond

Who are the holders of Common Stock in a corporation?

• Preferred shareholders

• Investors from the secondary market

• Stockholders with no preferences

• Employees of the corporation