Unit 1 - Part 1

What is the primary aim of the financial system?

• Provide subsidies to investors

• Maintain tax collection efficiency

• Establish a link between depositors and investors

• Promote public welfare

Which of the following is not a feature of a financial system?

• Provides linkage between depositors and investors

• Supports hoarding of capital

• Promotes productive resource allocation

• Contributes to healthy economic functioning

What function involves directing funds to the most profitable uses?

• Mobilization of savings

• Allocation of resources

• Price discovery

• Liquidity provision

Which financial system function ensures secure payment mechanisms?

• Liquidity Provision

• Risk Management

• Facilitation of Payments

• Price Discovery

Which of the following tools is primarily associated with risk management?

• Mutual Funds

• Insurance and Derivatives

• Treasury Bills

• Equity Shares

The financial system enables which of the following through financial markets?

• Import substitution

• Political representation

• Price discovery

• Price controls

Which function helps in converting financial assets into cash?

• Price Discovery

• Liquidity Provision

• Monitoring Fund Usage

• Risk Diversification

Who monitors fund usage and borrower performance in the financial system?

• SEBI

• Government

• Financial intermediaries

• Investors

Financial institutions serve as a link between:

• Borrowers and government

• Investors and manufacturers

• Corporates and retailers

• Savers and Borrowers

Which of the following is a feature of organized financial institutions?

• Lack of transparency

• Operate on verbal agreements

• Governed by regulatory bodies like RBI and SEBI

• High and arbitrary interest rates