1. Introduction to financial services

Question 1

Inflation

Answer 1

Increased prices of goods and services

Question 2

Intermediation

Answer 2

Middleman for financial transactions, i.e banks

Question 3

4x Elements of Intermediation

Answer 3

1. Geographic location
2. Aggregation
3. Maturity transformation
4. Risk transformation

Question 4

Disintermediation

Answer 4

Lenders and borrows interacting directly i.e crowdfunding

Question 5

3x Product Sales Intermediaries

Answer 5

1. Insurance Brokers
2. Financial Advisers
3. Mortgage brokers

Question 6

Retail Banks

Answer 6

Banks that provide services to people and small businesses

Question 7

Wholesale Banks

Answer 7

Banks that provide funding for Financial institutions or large cooperate companies

Question 8

7x Bank of England

Answer 8

1. Issuer of bank notes
2. Banker to the government
3. Banker to the banks
4. Adviser to the government
5. Foreign exchange market
6. Lender of last resort
7. Maintaining economic stability

Question 9

Liquidity

Answer 9

Assets made quickly available i.e cash

Question 10

Gilt edged securities

Answer 10

Loans to the government

Question 11

Proprietary

Answer 11

Limited companies owned by shareholders
Paid in dividends
Contribute to decisions

Question 12

Mutual Organisations

Answer 12

Owned by members who contribute to decisions

members are depositors and borrowers

Question 13

Demutualisation

Answer 13

Building societies turning into a Limited company

‘Carpetbagging’ company going to convert for shares

Question 14

Credit union

Answer 14

A mutual organisation for the benefit of members
Membership requirements
Pool of money

Question 15

Interbank Market

Answer 15

Large market which recycles surplus cash held by banks

through specialist money brokers

Question 16

What is Libor

Answer 16

• Rate of interest charged in the interbank market

- reference rate for cooperate companies

Question 17

L.I.B.O.R

Answer 17

London Interbank Offering Rate