Business Finance Long Quiz

Which of the following provides products and services related to financial transactions?

• financial institutions

• financial management

• financial market

• financial securities

What are the primary activities of a depository financial institution?

• making investment portfolios of investors

• providing loans to different companies

• creating life insurance policies for individuals

• accepting deposits from individual entities

What is the difference between depository and non-depository financial institutions?

• Depository financial institutions accept deposits from individuals and organizations, while non-depository financial institutions do not.

• Depository financial institutions are supervised by the central bank, while non-depository financial institutions do not.

• Depository financial institutions deal with financial transactions, while non-depository financial institutions deal with non-financial activities.

• Depository financial institutions offer loans and amortizations only, while non-depository financial institutions offer deposit payments and investments.

What is the main function of brokerage firms?

• Brokerage firms offer loans that can alleviate the financial difficulties of their customers.

• Brokerage firms assume the risks of fortuitous events that may negatively affect individuals and organizations.

• Brokerage firms facilitate the transactions between buyers and sellers of securities.

• Brokerage firms allow individuals to invest in real estate for higher profits and better leverage.

How do financial institutions generate income?

• Financial institutions generate income by collecting penalty charges from late buyers.

• Financial Institutions generate income from interests and commissions.

• Financial institutions generate income by implementing hidden charges from particular products and services.

• Financial institutions generate income by imposing taxes on particular products and services.

How do financial institutions help the economy during a crisis?

• Whenever there are deficits in money circulation, the government, businesses, and people rely on financial institutions to finance their industry and other needs.

• Whenever there are obstacles in importation, the government, businesses, and people rely on financial institutions to solve the problem.

• Whenever there are mass production shortages of a product, the government, businesses, and people rely on financial institutions to finance the production.

• Whenever there is an increase in the unemployment rate, financial institutions are obliged to create entrepreneurial opportunities for people.

Which of the following is true about non-depository financial institutions?

• NDFIs are authorized to offer loans to anyone.

• NDFIs accept deposits upon approval of the central bank of a country.

• NDFIs are not regulated by any state instrumentality.

• NDFIs encourage investment and for income protection.

How do central banks contribute to the economy?

• They encourage all economic units to save money.

• They produce paper bills and coins to generate more money.

• They regulate the prices of commodities available in the market.

• They regulate the interest rates of retail and commercial banks.

Paolo, a 28-year-old working millennial, wants to increase his security against unforeseen future events that may result in great financial losses. Which of the following financial institutions can help him achieve this goal?

• insurance companies

• mortgage companies

• brokerage firms

• credit unions

Carla, your friend, asks for your advice about engaging in various services of financial institutions. Which of the following is the most sound advice that you can give her?

• Internet banks are not real banks since they are only online and have no physical offices.

• Insurance companies are great for short-term investments, and you can get your returns anytime.

• Banks profit from interests on your loans, so make sure that you evaluate their rates when borrowing money from them.

• Credit unions are great for long-term investments since other major corporations are involved.