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Match the intermediary with the characteristic that best describes its function. 1. Provide protection from adverse events. II. Pool funds of small savers and invest

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Match the intermediary with the characteristic that best describes its function. 1. Provide protection from adverse events. II. Pool funds of small savers and invest in either money or capital markets. III. Provide consumer loans and real estate loans funded by deposits. IV. Accumulate and transfer wealth from work period to retirement period. V. Underwrite and trade securities and provide brokerage services. 1. Thrifts 2. Insurers 3. Pension funds 4. Securities firms and investment banks 5. Mutual funds Multiple Choice 1,3,2,5,4 O 4, 2, 3, 5,1 4,2,3,5,1 2.48.21 n e investment banker Morgan Stanley. Morgan Stanley then resells the issue to the U.S. public through its IBM creates and sells additional stoc mutual funds. This transaction is an example of a(n) Multiple Choice O primary market transaction. o foreign exchange transaction o O asset transformation by Morgan Stanley forward transaction o o o money market transaction Liquidity risk at a financial intermediary (Fl) is the risk Multiple Choice that a sudden surge in liability withdrawals may require an Fl to liquidate assets quickly at fire sale prices. 0 incurred by an Fl when its investments in technology do not result in cost savings or revenue growth. 0 risk that an Fl may not have enough capital to offset a sudden decline in the value of its assets. 0 that promised cash flows from loans and securities held by Fls may not be paid in full. 0 0 incurred by an Fl when the maturities of its assets and liabilities do not match. The most diversified type of depository institutions is Multiple Choice credit unions. savings associations. mutual funds. commercial banks. finance companies. Money markets trade securities I. mature in one year or less. II. have little chance of loss of principal. III. must be guaranteed by the federal government. Multiple Choice I and II only 0 I and Ill only 0 I, II, and III 0 I only 0 Il only 0

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