Which of the following is NOT a major function of financial intermediaries?

Question

BlackTom AI · Accepted Answer

The question asks which option is NOT a major function of financial intermediaries, so we will evaluate each choice in turn.
Option a: information production. Financial intermediaries gather and process information about borrowers and investments, reducing information asymmetry and helping allocate capital more efficiently. This is a recognized major function, so this option describes a valid intermediary role.
Option b: brokerage services. Intermediaries offer brokerage and trading services, matching buyers and sellers and facilitating transactions. This is a core function of many financial intermediaries, so this option is indeed a major function.
Option c: management of the nation's money supply. This task is typically associated with the central bank or monetary authorities, not with financial intermediaries. Central banks conduct monetary policy, set reserve requirements, and influence liquidity, whereas intermediaries operate in markets and provide services. Therefore, this option does not describe a typical function of financial intermediaries.
Option d: asset transformation services. Intermediaries transform illiquid assets into more liquid liabilities, and convert short-term liabilities into long-term assets, among other forms of maturity and risk transformation. This is a fundamental function of financial intermediaries, so this option is a major function.
In summary, options a, b, and d describe standard roles of financial intermediaries, while option c describes a function more characteristic of a central monetary authority rather than an intermediary.

BFF2401 - S2 2025 Moodle Exercise 1

Which of the following is NOT a major function of financial intermediaries?

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BFF2401 - S2 2025 Moodle Exercise 1

Which of the following is NOT a major function of financial intermediaries?

View Explanation

Log in for full answers

Similar Questions

Financial intermediaries are[Fill in the blank]

Part 1Which of the following is not an important financial intermediary in the​ economy? A. Commercial banks. B. Mutual funds. C. The Fed. D. Finance companies.

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Which of the following statements is FALSE?

Which function of a financial intermediary reduces transaction and information costs between a corporation and individual which may encourage a higher rate of savings?

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More Practical Tools for Students Powered by AI Study Helper

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