What are the three functions that banks perform as financial intermediaries?
What will be an ideal response?
The three functions that banks perform as financial intermediaries are:
a. Banks identify good investment options.
b. Banks transform short-term liabilities like deposits, into long-term investments.
c. Banks transfer risk from depositors to the bank's stockholders and, in some cases, to the government.
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To appreciate the U.S. dollar against the Mexican peso, in the foreign exchange market the Fed could ________ dollars and ________ pesos
A) buy; buy B) sell; sell C) sell; buy D) buy; sell E) None of the above answers is correct because the Fed cannot affect the U.S. exchange rate.
In 2002 some politicians and many representatives of the steel and iron-ore mining industries in the U.S. complained foreign steel producers were illegally "dumping" steel and contributing to a potential unemployment problem
According to the economic way of thinking, their argument is questionable because A) it is not at all clear what the appropriate or correct price of steel is. B) it is not at all clear what the appropriate or correct cost of steel is. C) it is not at all clear that such an activity increases total unemployment in the U.S. D) all of the above are true.