Free CIMAPRA17-BA1-1 Exam Braindumps
BA1 - Fundamentals of Business Economics Questions 226–230 (page: 47)

Updated On: 9-Feb-2026

Financial intermediation is the process by which

  1. Net savers and net borrowers are brought together.
  2. Banks create credit on the basis of their liquid assets.
  3. The central bank acts as a link between commercial banks and the government.
  4. Banks provide commercial services for their customers.

Answer(s): A



Which of the functions of a financial intermediary is described by the following statement 'Bundles small deposits of liquidity into larger loans'?

  1. Aggregation
  2. Risk management
  3. Maturity transformation
  4. Introducing borrows and lenders

Answer(s): A



Which of the functions of a financial intermediary is described by the following statement 'Invests across a wide range of assets to reduce the loss of capital value if a particular borrower defaults'?

  1. Aggregation
  2. Risk management
  3. Maturity transformation
  4. Introducing borrows and lenders

Answer(s): B



Which of the functions of a financial intermediary is described by the following statement 'converts a flow of short-term deposits into a supply of long term loans'?

  1. Aggregation
  2. Risk management
  3. Maturity transformation
  4. Introducing borrows and lenders

Answer(s): C



Identify in the following list the statement that does not describe a function of a financial intermediary:

  1. Aggregation of funds
  2. Maturity transformation
  3. Risk transformation
  4. Transfer payments

Answer(s): D



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