Checkup Quiz on Banking and FI

The basic function of financial markets is to channel funds from savers who have an excess of funds to spenders who have a shortage of funds.

• True

• False

A primary market is a financial market in which securities that have been previously issued can be resold.

• True

• False

The concept of present value is based on the common sense notion that a peso paid to you one year from now is more valuable to you than a peso paid to you today.

• True

• False

The Bangko Sentral ng Pilipinas has defined three different measures of the money supply - M1, M2, and M3.

• True

• False

A debt instrument is considered long term if its maturity is less than one year.

• True

• False

Rediscounting operations is by far the most significant tool of the BSP for controlling the supply of money.

• TRUE

• FALSE

If the BSP wants to increase the money supply, it increases the required reserve ratio.

• TRUE

• FALSE

An expansionary policy of the government leads to lower interest rates and more lending/borrowing.

• TRUE

• FALSE

Banks can get the most out its assets with the least risk by lending to individuals and firms with high risk of default.

• TRUE

• FALSE

Capital Adequacy Ratio is a measure of a bank's capital in relation to its risk-weighted assets.

• TRUE

• FALSE