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Home  arrow Student Resources  arrow Chapter 21: Financial institutions and markets  arrow Multiple choice questions

Multiple choice questions

Try the following multiple choice questions to test your knowledge of this chapter. Once you have answered the questions, click on 'Submit Answers for Grading' to get your results.

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This activity contains 15 questions.

Question 1.
Which three of the following are key elements within the UK financial system?

a) Lenders and Borrowers
b) Public Limited Companies
c) Brokers and Asset Transformers
d) Money Markets and Capital Markets
e) Multinational Enterprises

End of Question 1

Question 2.
Which one of the following is not a role of the financial intermediaries?

End of Question 2

Question 3.

Which three of the following are core functions of the Bank of England?

a) Maintaining the integrity and value of the currency
b) Setting interest rates via the Monetary Policy Committee
c) Maintaining the stability of the financial system
d) Setting the UK’s exchange rate
e) Setting UK tax rates

End of Question 3

Question 4.
Which three of the following are characteristics of Treasury Bills?

a) Long-term financial instruments
b) Short-term financial instruments
c) Widely traded on the discount market
d) Highly illiquid securities
e) Highly liquid securities

End of Question 4

Question 5.

Which two of the following would ‘tighten’ the liquidity situation of banks?

a) Increased sales of government securities to individuals or institutions who pay for them from their bank accounts
b) Decreased sales of government securities to individuals or institutions who pay for them from their bank accounts
c) Regulations requiring the banks to maintain positive end-of-day balances with the Bank of England
d) Removal of regulations requiring the banks to maintain positive end-of-day balances with the Bank of England
e) Lower levels of taxation and reductions in tax receipts to the Treasury

End of Question 5

Question 6.
For the following five questions, match each description with its correct term.  
Organised markets that enable the existing equity and debt of issuing companies to be traded.

End of Question 6

Question 7.
Where short-term financial instruments are bought and sold at prices below their redemption value on maturity.

End of Question 7

Question 8.
Organised markets that enable new issues of equity and debt to be traded.

End of Question 8

Question 9.
Involves transactions in which one party sells a financial asset to another party and agrees to repurchase an equivalent value of financial assets at some time in the future.

End of Question 9

Question 10.
Involves transactions in paper assets issued by banks, building societies and finance houses to depositors who are willing to leave their money on deposit for a specified period of time.

End of Question 10

Question 11.
Answer the following five questions either 'True' or 'False'.  
Brokerage intermediaries assess information on lenders and borrowers but do not purchase or hold financial assets.

End of Question 11

Question 12.
Bank financial intermediaries include the building societies, pension funds, investment trusts and unit trusts.

End of Question 12

Question 13.
Asset-transforming intermediaries acquire liabilities and transform them into assets with different characteristics in terms of maturity, liquidity and yield.

End of Question 13

Question 14.
Financial markets include the capital markets which mainly deal in short-term financial assets.

End of Question 14

Question 15.
The Financial Services Authority (FSA) has replaced the Bank of England in having responsibility for regulating all UK financial institutions, whether bank or non-bank.

End of Question 15

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