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15 Cards in this Set
- Front
- Back
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What are the four main reasons why individuals and companies need financial intermediation? |
Geographic location- lenders and borrowers are not necessarily able to find each other directly due to location
Aggregation- an individual lender may not have enough funds for the borrower
Maturity transformation- borrower needs funds for longer than lender is prepared to lend.
Risk transformation- lender may be reluctant to lend all their funds to one borrower, as they may not repay. |
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What is the key difference between a mutual organisation and a proprietary organisation?? |
A mutual organisation is owned by its members. In the case of a building society, these are savers and borrowers, for a life assurance company. They are the policyholders. ▶️A proprietary organisation is owned by its shareholders and is a limited company. |
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A financial transaction that is carried out directly between an organisation with surplus funds to lend and one that needs to borrow is an example of: |
Disintermediation |
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Which one of the following is not a role of the Bank of England?? To regulate the supply of money and manage gold reserves. To act as a financial ombudsman in resolving customer complaints about banks. To act as he advisor to the government. To set interest rates |
To act as financial ombudsman in resolving customer complaints about banks. |
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Which institution issues uk banknotes? |
The bank of england |
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Which institution issues coins? |
The royal mint |
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Credit unions can pay interest on savings. true or false? |
True- pay interest on savings as long as they have necessary systems and controls in place and have at least £50,000 or 5% in total assets in reserve. |
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Fresh food limited supplies, fruit and vegetables to market traders and small shops. The bank transactions it carries out are an example of: Wholesale banking or retail banking? |
Retail banking |
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Who is responsible for administrating, Sonia? |
The Bank of England is the administrator for Sonia. The FCA used to regulate the wholesale market brokers association. |
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How can a bank involved in wholesale banking raise money quickly in order to finance business activities? |
From the interbank market |
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What does Sonia stand for? |
Sterling overnight index average Introduced 1996 |
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What is meant by Libor? |
London interbank offered rate (Libor) Libor scandal 2012 banks were inflating or deflating rates to profit from trades |
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What is wholesale banking? |
Wholesale services are provided to large companies, the government and other financial institutions |
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What is the maximum borrowing a building society can raise on the wholesale market? |
25% of their assets |
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How do financial business institutions calculate the interest paid on swap transactions and sterling floating rate notes is the: |
Sterling overnight index average |
