Financial System Quiz

What is the primary function of a financial system?

• Providing employment opportunities

• Facilitating the flow of funds between savers and borrowers

• Regulating taxation policies

• Controlling inflation

Which of the following is NOT a component of the financial system?

• Financial institutions

• Financial markets

• Real estate agencies

• Financial instruments

Which of the following is a characteristic of an efficient financial system?

• Limited access to financial services

• High transaction costs

• Transparency and liquidity

• Absence of regulatory bodies

Financial markets can be broadly classified into which two major categories?

• Primary and secondary markets

• Domestic and international markets

• Open and closed markets

• Public and private markets

Which of the following is an example of a financial intermediary?

• Stock exchange

• Commercial bank

• Insurance company

• Both B and C

What is the main role of financial regulators?

• To manipulate stock prices

• To ensure stability and fairness in financial markets

• To eliminate financial institutions

• To discourage foreign investments

The central bank of a country primarily controls which of the following?

• Trade policies

• Monetary policy

• Fiscal policy

• Stock market investments

Which financial market deals with short-term debt instruments?

• Capital market

• Money market

• Derivatives market

• Foreign exchange market

Bonds, stocks, and derivatives are examples of what?

• Financial assets

• Physical assets

• Intangible liabilities

• Non-tradable goods

What does the term "liquidity" refer to in a financial system?

• The ability to convert an asset into cash quickly without significant loss

• The total assets of a financial institution

• The profit generated by financial markets

• The government's monetary reserves