Which of the Following Is an Example of Financial Intermediation

question 124

Multiple Choice

Which of the following is an example of financial intermediation?

• A)John buys shares of stock issued by a fast food company.
• B)A foreign government buys bonds issued by the U.S.Treasury.
• C)Susan makes a deposit at a bank and the bank uses this money to make an auto loan to Ferguson.
• D)None of the above is correct.

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Definitions:

Fixed Exchange Rate

A currency valuation system in which a country’s currency value is pegged against another currency, a basket of currencies, or a commodity like gold.

Covariance

A statistical measure that indicates the degree to which two variables change together.

Standard Deviation

A statistical measurement that depicts the variability or volatility of an investment's returns.

EAFE Index

The Europe, Australasia, Far East index is a widely used index of non-U.S. stocks.