Unit 1 Topic 1

Introducing the financial services industry

1 / 10

In recent years, which means have large institutions in financial services markets predominantly used to achieve growth and diversification?

Internally funded growth

Mergers and takeovers

Additional share issues

Focus on existing strengths

2 / 10

The role of the Bank of England's Monetary Policy Committee (MPC) is:

To set inflation targets

To set the Bank of England Base Rate

To set capital adequacy levels

To veto undesirable takeovers

3 / 10

In order to be acceptable as a medium of exchange, money must have all EXCEPT which one of the following?

It must be free from the effects of inflation

It must be sufficient in quantity

It must be divisible into small units

It must be generally acceptable to all parties in all transactions

4 / 10

Notes and coins are accepted as legal tender because they have:

The backing of the government and the central bank.

Been approved by the Treasury.

Been issued by a high street bank.

The International Monetary Fund's backing and are issued by the government.

5 / 10

Up to what percentage of their liabilities may Building Societies raise funds on the wholesale market?

40%

100%

50%

25%

6 / 10

In order to expedite funding for business activities in wholesale banking, how can a bank achieve this quickly?

By issuing gilts.

Through additional share issuance.

By borrowing from the Bank of England.

By accessing the interbank market.

7 / 10

Which one of the following factors distinguishes building societies from other financial institutions?

They cannot make regulated loans.

They are owned by their shareholders.

They are mutual institutions owned by their members.

They only lend for mortgage purposes.

8 / 10

Which of the following statements accurately distinguishes a mutual organization from a proprietary organization?

It has the ability to offer shares on the stock market.

Profits are distributed among members as dividends.

Its ownership lies with members, not shareholders.

Its lending is restricted solely to other financial institutions.

9 / 10

Financial intermediaries facilitate maturity transformation due to their ability to:

Minimize the risk of default or fraud by lending to a diverse array of borrowers.

Consolidate numerous small deposits received from a substantial clientele base.

Present an extensive selection of deposit accounts catering to diverse depositors.

Offer services to clients across various geographical locations.

10 / 10

The Bank of England is a central bank because :

Has been approved by the Treasury and lends money directly to other banks.

Acts as banker to the government, supervises the economy, and regulates the supply of money.

Deposits money with the International Monetary Fund.

Holds reserves of foreign currency for other banks and institutional investors.

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