Free CIMAPRA17-BA1-1 Exam Braindumps (page: 59)

Page 59 of 118

Lenders normally wish to offer their funds for the short term, but most borrowers prefer to borrow over the long term. Resolving this mismatch is known as:

  1. Risk reduction
  2. Aggregation
  3. Maturity transformation
  4. Pooling

Answer(s): C



The linking of net savers with net borrows is known as:

  1. financial intermediation
  2. the savings function
  3. money transfer
  4. credit creation

Answer(s): A



Which of the following describes the eventual increase in bank deposits that will result from the banking system receiving an additional £2bn of cash deposits whilst holding a cash ratio (or reserve ratio) of 7%?

  1. £0.28bn
  2. £2.15bn
  3. £14bn
  4. £28.57bn

Answer(s): D



£100 of new cash is issued, which is then deposited in a bank which is part of a banking system operating a cash ratio of 10%. The maximum possible increase in the money supply which can follow from this transaction, additional to the initial deposit, is

  1. £90
  2. £190
  3. £900
  4. £1000

Answer(s): C



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