The Commercial Bank by Issuing Its Own Financial Claims Transforms

question 33

Multiple Choice

The commercial bank by issuing its own financial claims transforms a longer-term asset into a shorter-term one by giving the borrower a loan for the length of time sought and the investor/depositor a financial asset for the desired investment horizon. This function of a financial intermediary is called ________.

• A) diversification.
• B) maturity intermediation.
• C) information processing costs.
• D) providing payment mechanisms.

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Definitions:

Reinforcement Theory

A theory in psychology that posits behavior is driven by its consequences, with reinforcement used to increase desirable behaviors.

Type Of Reward

Refers to the various forms of compensation or recognition given to individuals or groups for reaching specific goals or desired behaviors.

Expectancy Theory

A motivation theory which suggests that an individual's behavior is determined by their expected outcomes and the attractiveness of those outcomes.

Barry Staw

A renowned organizational psychologist known for his work on concepts such as organizational commitment and the escalation of commitment.