Unit 1 Topic 1

Introducing the financial services industry

1 / 10

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

By borrowing from the Bank of England.

By accessing the interbank market.

By issuing gilts.

Through additional share issuance.

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

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

Its lending is restricted solely to other financial institutions.

Its ownership lies with members, not shareholders.

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

Profits are distributed among members as dividends.

4 / 10

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

40%

50%

25%

100%

5 / 10

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

Additional share issues

Mergers and takeovers

Focus on existing strengths

Internally funded growth

6 / 10

The Bank of England is a central bank because :

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

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

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

Deposits money with the International Monetary Fund.

7 / 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.

Offer services to clients across various geographical locations.

Consolidate numerous small deposits received from a substantial clientele base.

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

8 / 10

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

It must be divisible into small units

It must be generally acceptable to all parties in all transactions

It must be sufficient in quantity

It must be free from the effects of inflation

9 / 10

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

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

Been issued by a high street bank.

Been approved by the Treasury.

The backing of the government and the central bank.

10 / 10

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

They only lend for mortgage purposes.

They are owned by their shareholders.

They cannot make regulated loans.

They are mutual institutions owned by their members.

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