FIs Perform Their Intermediary Function in Two Ways

question 33

Multiple Choice

FIs perform their intermediary function in two ways:

• A)They specialise as brokers between savers and users and they directly control the quantity of outside money in the economy.
• B)They serve as asset transformers by purchasing primary securities and issuing secondary securities and by purchasing secondary securities and issuing primary securities.
• C)They serve as asset transformers by purchasing secondary securities and issuing primary securities and they directly control the quantity of outside money in the economy.
• D)They specialise as brokers between savers and users and they serve as asset transformers by purchasing primary securities and issuing secondary securities.

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Definitions:

Units

A measure of quantity or amount used in the context of production, inventory, or sales within various sectors.

Contribution Margin

The amount by which sales revenue exceeds variable costs of production, contributing to the coverage of fixed costs and profit generation.

Manufacturing Cost

The total expense incurred in the process of producing goods, including materials, labor, and overhead costs.

Unit

A single item, person, or measurement regarded as an indivisible part of a larger quantity or whole.