The chapter discusses three main functions of a banking system Classify each of the following
by the function it best represents. a. Aaron can get cash out of the ATM at any time of day or
night. Diversify risk. Intermediate between savers and borrowers. Provide liquidity, b. Instead of
lending all her savings out to one borrower, Barbara?s bank makes the money In her savings
account available to a variety of firms, with different characteristics and risk profiles, wishing to
invest. C Provide liquidity. Intermediate between savers and borrowers. Diversify risk. c. When
Charlies car suddenly breaks down, he can quickly withdraw funds from his savings account to
pay the mechanic and rent a car. Provide liquidity. DiversIfy risk. Intermediate between savers
and borrowers. d. Donna can get start-up funds for her new hair salon from a bank, Instead of
having to find people In her neighborhood willing to lend their extra money. Diversify risk.
Intermediate between savers and borrowers. Provide liquidity.
Solution
diversification of risk
the diversification of risk means that wide variety of investment within a portfolio. the
diversification can be take into account the risk management technique that takes into account
for different kinds of investment,that gives higher returns and lower risk.
intermediate between savers and borrowers
in the modern definition given by economics for the financial institutions are the intermediate
between savers and the borrowers. the institution are played intermediate role between the savers
and the borrowers. they can easily write a document for this relationship. that is what we called
the primary securities.
provide liquidity.
we know that liquidity means that the asset can be easily converted into cash. the cash is the
most liquid asset than any other asset.
1. answer B
2.answer D
3.answer A
4.answer C.
The chapter discusses three main functions of a banking system Classi.pdf
1. The chapter discusses three main functions of a banking system Classify each of the following
by the function it best represents. a. Aaron can get cash out of the ATM at any time of day or
night. Diversify risk. Intermediate between savers and borrowers. Provide liquidity, b. Instead of
lending all her savings out to one borrower, Barbara?s bank makes the money In her savings
account available to a variety of firms, with different characteristics and risk profiles, wishing to
invest. C Provide liquidity. Intermediate between savers and borrowers. Diversify risk. c. When
Charlies car suddenly breaks down, he can quickly withdraw funds from his savings account to
pay the mechanic and rent a car. Provide liquidity. DiversIfy risk. Intermediate between savers
and borrowers. d. Donna can get start-up funds for her new hair salon from a bank, Instead of
having to find people In her neighborhood willing to lend their extra money. Diversify risk.
Intermediate between savers and borrowers. Provide liquidity.
Solution
diversification of risk
the diversification of risk means that wide variety of investment within a portfolio. the
diversification can be take into account the risk management technique that takes into account
for different kinds of investment,that gives higher returns and lower risk.
intermediate between savers and borrowers
in the modern definition given by economics for the financial institutions are the intermediate
between savers and the borrowers. the institution are played intermediate role between the savers
and the borrowers. they can easily write a document for this relationship. that is what we called
the primary securities.
provide liquidity.
we know that liquidity means that the asset can be easily converted into cash. the cash is the
most liquid asset than any other asset.
1. answer B
2.answer D
3.answer A
4.answer C
