Topic 1&2 Flashcards
Parliament and economy
Financial intermediaries can provide maturity transformation because they:
A. offer a wide range of deposit accounts to a wide range of depositors.
B. aggregate many small deposits from a large number of clients.
C. provide services to clients from many different geographical locations.
D. reduce the risk of default or fraud by lending to a wide variety of borrowers.
A. offer a wide range of deposit accounts to a wide range of depositors.
A key difference between a mutual organisation and a proprietary organisation is that a mutual organisation:
A. can issue shares on the stock market.
B. is owned by members not shareholders.
C. shares its profits in the form of dividends.
D. is only allowed to lend to other financial institutions.
B. is owned by members not shareholders.
How can a bank involved in wholesale banking raise money quickly in order to finance business activities?
A. By a further issue of shares
B. By borrowing from the Bank of England
C. From the interbank market
D. By issuing gilts
C. From the interbank market
What is the role of the Bank of England’s Monetary Policy Committee?
A. To veto undesirable takeovers
B. To set capital adequacy levels
C. To set the Bank of England Base Rate
D. To set inflation targets
C. To set the Bank of England Base Rate
In order to be acceptable as a medium of exchange, money must have all EXCEPT which one of the following?
A. It must be divisible into small units
B. It must be generally acceptable to all parties in all transactions
C. It must be free from the effects of inflation
D. It must be sufficient in quantity
C. It must be free from the effects of inflation
The Bank of England is a central bank because it:
A. deposits money with the International Monetary Fund.
B. has been approved by the Treasury and lends money direct to other banks.
C. holds reserves of foreign currency for other banks and institutional investors.
D. acts as banker to the government, supervises the economy and regulates the supply of money.
D. acts as banker to the government, supervises the economy and regulates the supply of money.
What means have large institutions in financial services markets predominantly used to achieve growth and diversification in recent years?
A. Mergers and takeovers
B. Focus on existing strengths
C. Internally funded growth
D. Additional share issues
A. Mergers and takeovers
Jon has notes and coins that are accepted as legal tender. This is because they have:
A. been approved by the Treasury.
B. the backing of the government and the central bank.
C. been issued by a high street bank.
D. the International Monetary Fund’s backing and are issued by the government.
B. the backing of the government and the central bank.
Which one of the following factors distinguishes building societies from other financial institutions?
A. They are mutual institutions owned by their members
B. They are owned by their shareholders
C. They only lend for mortgage purposes
D. They cannot make regulated loans
A. They are mutual institutions owned by their members
Up to what percentage of their liabilities may Building Societies raise funds on the wholesale market.
A. 50%
B. 25%
C. 100%
D. 40%
A. 50%
What is the target range of inflation that the government are hoping to achieve as measured by the Consumer Price Index?
A. 3-5%
B. 2-4%
C. 1-3%
D. 2.5-5%
C. 1-3%
The European Union has issued a new DIRECTIVE. This means that each member state:
A. must implement the Directive in its entirety within the specified timescale.
B. can choose whether or not to adopt the Directive.
C. has the choice of how to meet the Directive’s objectives.
D. must implement the Directive, provided the member state is part of the Eurozone.
C. has the choice of how to meet the Directive’s objectives.
The regulatory framework for the financial services industry in the UK is a five tier process. Which one of the following bodies has taken over the activities in the third tier?
A. The Financial Ombudsman Service
B. The Building Societies Commission
C. The PRA and FCA
D. The Lenders Code
C. The PRA and FCA
Which index does the government use to assess the inflation rate?
A. Retail prices index
B. Consumer prices index
C. Construction and building prices index
D. FTSE 100 index
B. Consumer prices index
Under what circumstances if any can a nation state opt out of a regulation laid down by the European Council and Council of Ministers?
A. None
B. Only if specific dispensation has been granted
C. Only if an alternative approach has been agreed
D. Only if the member has joined within the previous three years
B. Only if specific dispensation has been granted
