Page 96 - CAPE Financial Services Syllabus Macmillan_Neat

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(D) State and local government bond

12. Financial intermediaries are important in financial markets because they

I. substantially reduce transaction costs
II. large size allows them to take advantage of economies of scale
III. help to reduce the exposure of investors to risk through risk sharing
IV. alleviate the problems created by adverse selection and moral hazard

(A) I and II only
(B) I, II and III only
(C) II, III and IV only
(D) I, II III and IV

13. Which of the following are investment intermediaries?

I. Pension Funds and Government Retirement Funds
II. Mutual Funds
III. Money Market Mutual Funds

(A) I and II only
(B) I and III only
(C) II and III only
(D) I, II and III

14. Which of the following are contractual savings institutions?
I. Life Insurance Companies
II. Credit Unions

III. Pension Funds and Government Retirement Funds

(A) I and II only
(B) I and III only
(C) II and III only
(D) I, II and III

15. A company that helps a corporation underwrite securities by purchasing them from a
corporation at a predetermined price and reselling them in the market is known as

(A) a finance company
(B) a mutual fund
(C) a money market mutual fund
(D) an investment bank

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