Exam 1: Why Are Financial Institutions Special

Savers increasingly favor investments that closely imitate diversified investments in the direct securities markets over the transformed financial claims offered by traditional FIs.

As an asset transformer, the FI issues financial claims that are more attractive to household savers than the claims directly issued by corporations.

Of the ten largest banks in the world at the beginning of 2015, how many were U.S. banks?

The origination of a home mortgage loan is considered to be a

The federal government has traditionally extended safety nets to DIs consisting of

FIs perform their intermediary function in two ways

Financial institutions are subject to economies of scale in the collection of information.

Investment companies are successful in attracting business away from banks and insurance companies primarily because they

The asset transformation function of an FI is to issue primary financial claims to corporations while purchasing secondary claims issued by households and other investors.

Which of the following groups of FIs have experienced the highest percentage growth in assets in the U.S. financial services industry during the past sixty years?

Which of the following statements is FALSE?

Why is the failure of a large bank more detrimental to the economy than the failure of a large steel manufacturer?

Depository institutions (DIs) play an important role in the transmission of monetary policy from the Federal Reserve to the rest of the economy primarily because

The ability of savers to transfer wealth between youth and old age and across generations is called maturity intermediation.

Which function of an FI reduces transaction and information costs between a corporation and individual which may encourage a higher rate of savings?

As of 2015, U.S. FIs held assets totaling over $29 trillion.

The liabilities of depository institutions are significant components of the money supply.

Time intermediation involves the investment of small amounts by investors into mutual funds that invest in long-term securities such as stocks and bonds.

Because of changes in regulatory barriers, technology, and financial innovation, a single financial service firm may now be able to offer a full set of financial services.

Each of the following is a special function performed by FIs at a macro level EXCEPT