Questions
25_2 FIN376 Formative Online Test 1
Matching
In the context of the financial intermediaries, set the correct matching between the statements and the respective financial intermediary. 1: They offer savings plans through which fund participants accumulate savings during their working years before withdrawing them during their retirement years. ____ 2: They issue checkable deposits, saving deposits, and time deposits, and make commercial, consumer, and mortgage loans and buy securities. ____ 3: They protect individuals and corporations (policyholders) from adverse events. ____ 4: They raise funds by selling commercial paper and by issuing stocks and bonds, and they lend these funds to consumers and small businesses. ____ 5: They help a corporation issuing securities, advising corporations, underwriting securities and help also in mergers and acquisitions. ____ 6: They acquire funds by selling shares to individuals and use them to purchase diversified portfolios of stocks and bonds. ____ 7: They sell shares to acquire funds that are then used to buy money market instruments. ____
Options
A.Insurance companies
B.Pension funds
C.Finance companies
D.Commercial banks
E.Mutual funds
F.Money market mutual funds
G.Investment banks
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Step-by-Step Analysis
Let's examine each statement and identify which financial intermediary best fits.
Statement 1: They offer savings plans through which fund participants accumulate savings during their working years before withdrawing them during their retirement years. ____
- Pension funds: These entities specialize in accumulating retirement savings on behalf of participants and disbursing benefits in retirement, aligning perfectly with this description.
- Commercial banks: While they offer savings accounts, their primary role is not long-term retirement accumulation but transactional banking and broad lending.
- Insurance companies: Their core function is risk protection, not typically retirement savings accumulation.
- Finance companies: They provide lending and consumer finance, not retirement savings accumulation.
- Investment banks: Focus on corporate finance, underwriting, and advisory serv......Login to view full explanationLog in for full answers
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