Which of the following is not a clear benefit provided by financial institutions?Question 6Select one:a.Economies of Scaleb.Credit Risk Transformationc.Asset Transformationd.Liquidity Risk Transformatione.Economies of Scope
Question
Which of the following is not a clear benefit provided by financial institutions?Question 6Select one:a.Economies of Scaleb.Credit Risk Transformationc.Asset Transformationd.Liquidity Risk Transformatione.Economies of Scope
Solution
The answer is a. Economies of Scale. While economies of scale can be a benefit of larger financial institutions due to their ability to handle large volumes of transactions efficiently, it is not a clear benefit provided by all financial institutions. On the other hand, credit risk transformation, asset transformation, and liquidity risk transformation are all key services provided by financial institutions. These involve changing the risk profile of assets, transforming the nature of assets, and managing the risk of liquidity, respectively. Economies of Scope is also a benefit provided by financial institutions as they can offer a wide range of services under one roof.
Similar Questions
Which of the following is an advantage of merger?Question 8Select one:a.Economies of scaleb.Finance advantagesc.Business diversificationd.a,be.all of the above
Which of the following is NOT associated with the purpose of regulating financial institutions? Question 1Select one:Lowering the cost of fundsDirecting flow of funds to priority areasProviding stability of the money supplyMaintaining the soundness and stability of the financial system
With regard to asset transformation, financial intermediaries are able to provide deficit units with diverse loan products and at the same time satisfy the varying preferences of investors offering them a range of deposit products. Question 3Select one: True False
The asset transformation function can explain the situation that A.banks can operate at a low level of financial leverage.B.the liability structure of bank balance sheets tends to reflect a shorter maturity structure than does the asset structure.C.the use of off-balance-sheet activities will always reduce the risk to commercial banks.D.FIs can offer trust services. E.FIs can provide transaction services as well as advisory services to their customers.
Which of the following is not a way FinTech has impacted traditional financial institutions?Easier to collect and analyze customer dataLowered customer expectationsIncreased competitionCollaboration and acquisition
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.