Financial Institutions Special Case Study

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Register to read the introduction… they serve as asset transformers by purchasing secondary securities and issuing primary securities.
D. Answers A and B.
E. Answers A and C.

82. Which of the following is true of secondary securities?
A. They include equities, bonds, and other debt claims.
B. They are backed by the real assets of corporations issuing them.
C. They are securities that back primary securities.
D. They are securities issued by FIs.
E. They must be placed in a separate account on order for primary securities to be offered.

83. Each of the following is a special function performed by FIs at a macro level EXCEPT
A. transmission of monetary policy.
B. credit allocation.
C. intergenerational wealth transfers or time intermediation.
D. denomination intermediation.
E. interbank lending and investing.

84. Which of the following is closely associated with credit allocation regulation?
A. Support the FI's lending to socially important sectors.
B. Transmission of monetary policy from the Federal Reserve to the economy.
C. Ensure the safety and soundness of the FI.
D. Prevent discrimination in lending on the basis of age, race, sex, or income.
E. Protect investors against
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Depository institutions serve as the primary conduit through which monetary policy actions impact the economy.

23. The liabilities of depository institutions are significant components of the money supply.

24. The goal of credit allocation is the encouragement of FIs to diversity the composition of their assets.

25. Credit allocation regulations are typically designed to benefit customers as well as the financial institution that must implement the guidelines.

26. The qualified thrift lender test is utilized to determine whether an institution can serve as an FI.

27. Commercial banks and finance companies have traditionally served the needs of the residential real estate market.

28. The Federal Reserve mandates reserve requirements for depository institutions so that the DIs may provide payment services for the U.S. economy.

29. The ability of savers to transfer wealth between youth and old age and across generations is called maturity intermediation.

30. Time intermediation involves the investment of small amounts by investors into mutual funds that invest in long-term securities such as stocks and

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