Money and Banking Test 2 Test Bank Page 1 Money and Banking Test 2 Test Bank.pdf
Money and Banking Test 2
Test Bank
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Page 1 of 26 2026-03-17
,Money and Banking Test 2 Page 2 Money and Banking Test 2.pdf
Hide definitions
What is an important role of financial intermediaries?
providing liquidity
How do financial intermediaries reduce transaction costs?
Pooling investments of small savers, diversifying risk
There is a ____ ___ relationship between a nation finacial development and real GDP per capita
strong positive
How do financial intermediaries lower the cost of lending and borrowing
Safekeeping and accounting services, pooling recources for small savers, diversifying risk, supplying liquidity
The United States, Japan, the United Kingdom, and Germany fund a majority of their businesses through
Internal funds
Page 2 of 26 2 of 26 2026-03-17
, Money and Banking Test 2 Page 3 Money and Banking Test 2.pdf
network that transfers funds from one account to another is called
Payment system
Adverse Selection
A high-risk person benefits more from insurance, so is more likely to purchase it.
Moral Hazard
When the act of insuring an event increases the likelihood that the event will happen
when adverse selection exisits in stock and bond markets, high quality stocks will be priced ___ and ig quality bonds
will pay a risk premium that is ___
too low; to high
principal agent problem
a problem caused by an agent pursuing his own interests rather than the interests of the principal who hired him
Page 3 of 26 3 of 26 2026-03-17
Money and Banking Test 2
Test Bank
Guidehttps://www.stuvia.com/dashboard!@_)#*)(@$)($@*($@)($@*_1 of 26
Page 1 of 26 2026-03-17
,Money and Banking Test 2 Page 2 Money and Banking Test 2.pdf
Hide definitions
What is an important role of financial intermediaries?
providing liquidity
How do financial intermediaries reduce transaction costs?
Pooling investments of small savers, diversifying risk
There is a ____ ___ relationship between a nation finacial development and real GDP per capita
strong positive
How do financial intermediaries lower the cost of lending and borrowing
Safekeeping and accounting services, pooling recources for small savers, diversifying risk, supplying liquidity
The United States, Japan, the United Kingdom, and Germany fund a majority of their businesses through
Internal funds
Page 2 of 26 2 of 26 2026-03-17
, Money and Banking Test 2 Page 3 Money and Banking Test 2.pdf
network that transfers funds from one account to another is called
Payment system
Adverse Selection
A high-risk person benefits more from insurance, so is more likely to purchase it.
Moral Hazard
When the act of insuring an event increases the likelihood that the event will happen
when adverse selection exisits in stock and bond markets, high quality stocks will be priced ___ and ig quality bonds
will pay a risk premium that is ___
too low; to high
principal agent problem
a problem caused by an agent pursuing his own interests rather than the interests of the principal who hired him
Page 3 of 26 3 of 26 2026-03-17
