1.

What is the purpose of the financial system?

	A.	To enable small businesses to sell stock the same way large businesses do in order to level the playing field.
	B.	To channel information from businesses to the public.
	C.	To channels funds from persons or businesses with extra funds to those who have need of more funds.
	D.	To establish financial intermediaries
	E.	All of the above.

2.

What do we mean by liquidity?

	A.	Liquidity refers to how risky something is
	B.	Liquidity refers to how easily we can convert an investment into cash
	C.	Liquidity refers to borrowing instead of buying
	D.	Liquidity is used to measure the maturity of an investment

3.

Why do we care about asymmetric information?

	A.	It is a way that we classify financial institutions
	B.	It induces costs into the financial system
	C.	It is the reason that we have direct finance.
	D.	All of the above

4.

Which of the following statements best describes how a financial intermediary works?

	A.	A financial intermediary is an exchange, like a market, that allows buyers and sellers to find each other.
	B.	A financial intermediary is a company that raises money by issuing debt in the form of bonds.
	C.	A financial intermediary is like a middleman that comes between those who have excess funds and those who have a need for funds.
	D.	All of the above