Banks & Intermediation

Deposits, loans, and fractional reserves. Ideal for competitive exams and economics prep.

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QUESTION NO 01

A commercial bank’s core function is to?

Answer: Accept deposits and make loans

Banks intermediate between savers and borrowers.

Shahzad Mahota @shahzad-mahota

302 Quizzes

2930 Questions

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QUESTION NO 02

Interest is?

Answer: The price of borrowed money

Lenders earn interest; borrowers pay it.

Shahzad Mahota @shahzad-mahota

302 Quizzes

2930 Questions

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QUESTION NO 03

Inflation erodes?

Answer: The real value of money

Money buys less as prices rise.

Shahzad Mahota @shahzad-mahota

302 Quizzes

2930 Questions

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QUESTION NO 04

A central bank typically?

Answer: Issues currency and conducts monetary policy

It is the bankers’ bank and monetary authority.

Shahzad Mahota @shahzad-mahota

302 Quizzes

2930 Questions

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QUESTION NO 05

Fractional reserve banking means banks?

Answer: Hold only a fraction of deposits as reserves

Most deposits can be lent out under rules.

Shahzad Mahota @shahzad-mahota

302 Quizzes

2930 Questions

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QUESTION NO 06

A bond is?

Answer: A debt instrument promising interest and principal

Bondholders are creditors of the issuer.

Shahzad Mahota @shahzad-mahota

302 Quizzes

2930 Questions

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QUESTION NO 07

A share (stock) represents?

Answer: Ownership in a company

Shareholders have equity claims.

Shahzad Mahota @shahzad-mahota

302 Quizzes

2930 Questions

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QUESTION NO 08

Liquidity refers to?

Answer: How easily an asset converts to cash without big loss

Cash is the most liquid asset.

Shahzad Mahota @shahzad-mahota

302 Quizzes

2930 Questions

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QUESTION NO 09

Credit risk is the risk that?

Answer: A borrower fails to repay

Lenders assess default probability.

Shahzad Mahota @shahzad-mahota

302 Quizzes

2930 Questions

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QUESTION NO 10

Diversification aims to?

Answer: Reduce risk by spreading investments

Not all assets move together.

Shahzad Mahota @shahzad-mahota

302 Quizzes

2930 Questions

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Shahzad Mahota

@shahzad-mahota

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Banks & Intermediation

A commercial bank’s core function is to?

Interest is?

Inflation erodes?

A central bank typically?

Fractional reserve banking means banks?

A bond is?

A share (stock) represents?

Liquidity refers to?

Credit risk is the risk that?

Diversification aims to?

Published By

Shahzad Mahota

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00

00

00

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Banks & Intermediation

A commercial bank’s core function is to?

Explanation

Interest is?

Explanation

Inflation erodes?

Explanation

A central bank typically?

Explanation

Fractional reserve banking means banks?

Explanation

A bond is?

Explanation

A share (stock) represents?

Explanation

Liquidity refers to?

Explanation

Credit risk is the risk that?

Explanation

Diversification aims to?

Explanation

Published By

Shahzad Mahota

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