A Bank Lending Depositors' Money to a Local Business and a Pension

question 16

Multiple Choice

A bank lending depositors' money to a local business and a pension fund investing contributions in shares of a company are similar financial activities in that

• A)both involve the use of financial markets.
• B)both involve funds being channeled from savers to borrowers through financial intermediaries.
• C)both involve a reduction in the overall level of liquidity in the financial system.
• D)both involve in an increase in the overall level of risk in the financial system.

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Definitions:

Simulation Models

Computer-based models that represent real-world processes or systems for the purpose of analysis or decision-making.

Expert Systems

Expert systems are advanced computer programs designed to mimic the decision-making abilities of a human expert, typically in specific fields or disciplines.

Components in Parallel

Parts of a system designed to operate simultaneously, ensuring that if one part fails, the system as a whole can still function.

System Reliability

The probability that a system or component will perform its required functions without failure under stated conditions for a specified period of time.