Finance Fundamentals Quiz

Match the following functions with their descriptions.

• Primary function of finance

• To provide loans to individuals only

• Role of financial regulatory bodies

• To regulate stock markets

• Function of central banks in monetary policy

• To transfer money among businesses, individuals, and governments

• Service provided by banks to consumers

• To create new currencies

What is the basic rationale of a financial market?

• To increase government revenue

• To bring together savers and borrowers for investment

• To control inflation

• To provide employment opportunities

What is the primary role of financial intermediaries?

• To increase the interest rates for borrowers

• To mediate between the requirements of lenders and borrowers

• To eliminate the need for financial markets

• To provide free financial advice

What is the significance of 'funds at the lowest cost possible' for borrowers?

• It reduces the financial burden on borrowers

• It increases the interest rates

• It ensures liquidity

• It provides convenience

Which of the following is a borrower requirement that involves timing?

• Liquidity

• Funds at a particular specified date

• Highest possible return

• Convenience

How can financial intermediaries reduce their risk exposure?

• By concentrating funds in one investment

• By diversifying funds

• By only accepting high-risk investments

• By avoiding all investments

What do deposit-taking institutions ensure for savers?

• High returns on investments

• Instant access to their funds

• Long-term investment growth

• Reduced transaction fees

A key function of financial intermediaries in relation to savings is to ensure (a)   of savings.

• To increase the risk of savings
• To provide high returns on savings
• To ensure liquidity of savings
• To limit access to savings

Which of the following is a classification of financial markets based on the type of asset?

• Spot versus Futures Markets

• Money versus Capital Markets

• Physical Asset versus Financial Asset Markets

• Private versus Public Markets

(a)   focuses on the physical and organizational structures needed for the operation of a society.

• Business environment
• Infrastructure
• Financial sector development
• Reputation