Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES 1

College of Accountancy and Finance

V. QUIZ
QUESTIONS:
I. IDENTIFICATION
___________ 1. It is the process of indirect financing using financial intermediaries
as the main route to transfer funds from lenders to borrowers.
___________ 2. The national government raised fund through _________ .
___________ 3. Financial intermediaries belongs to what sector of the participant.
___________ 4. Unincorporated businesses such as retailers belong to what sector of
the market participants.
___________ 5. It is an element of financial system that is responsible for providing
efficient allocation of resources between fund demanders and fund providers.

II. MULTIPLE CHOICE

1. Which of the following is not a benefit of financial intermediaries?
A. Support in price valuation
B. Economies of scale
C. Efficient allocation of funds
D. Reduced price risk for lenders
2. It is a process of setting a price which is acceptable for the buyer and the seller
A. Moral Hazard
B. Adverse Selection
C. Price Discovery
D. Risk Mitigation
3. Economies of scale occurs when ______ are optimized per unit as a result of
sheer volume of transactions.
A. Fixed cost
B. Uncontrollable
C. Variable cost
D. Total cost
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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES 2
College of Accountancy and Finance

4. It occurs when potential borrowers have more information about the transaction
compared to the bank. It may also lead to adverse selection and moral hazard.
A. Acceleration of flow of bonds between entities
B. Implementation of monetary policy function
C. Maturity Intermediation
D. Asymmetric Information
5. It is an economic function exercised by financial intermediaries which converts
more risky assets to less risky assets through sharing of risks.
A. Creation of money
B. Diversification
C. Payments System
D. Liquidation
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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES 3
College of Accountancy and Finance

III. MATCHING TYPE

__ 1. It is the main revenue-generating assets A. Depository
for banks. Institutions
__ 2. Banks that are highly leveraged B. Finance Companies
institutions C. Investment on
__ 3. It is offered by the BSP to cover any Securities
shortfall demand deposit accounts of the D. Investment Banks
banks. E. Exchange Traded
__ 4. Also known as Universal banks Funds
__ 5. A financial intermediary that sells shares F. Contractual Savings
to the general public in exchange of cash. Institutions
__ 6. These are usually private investment G. Hedge Funds
partnership or offshore investment H. Loans
corporation. I. Deposits
__ 7. Through this, investment banks use its J. Commercial Banks
own money to lend money as a creditor or buy K. Overdraft Credit
shares as an investor. Line Facility
__ 8. One example of this company is Toyota L. Merchant Banking
Motor Philippines M. Regulated
__ 9. A financial intermediary that obtain Investment
funds at periodic intervals based on an Companies
existing contract.
__ 10. It offers liquidity to banks.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES 2
College of Accountancy and Finance

ANSWERS
I. IDENTIFICATION
1. Financial Intermediaries
2. Bureau of Treasury
3. Corporate Sector or Financial Corporation
4. Household Sector
5. Financial Markets
II. MULTIPLE CHOICE
1. A
2. C
3. A
4. D
5. B
III. MATCHING TYPE
1. H
2. D
3. K
4. J
5. M
6. G
7. L
8. B
9. F
10. C