1.Which of the following is an example of a financial intermediary? a)Banks. b)
ID: 1203078 • Letter: 1
Question
1.Which of the following is an example of a financial intermediary? a)Banks. b) The Federal Reserve. c) The U.S. Treasury. d) The department of finance.
2.The price paid for the use of money is defined as the a) Rental rate. b) Interest rate. c) Profit rate. d) Inflation rate.
3.The owners of a corporation are a)Liable for its debts. b) Those people who own the bonds issued by the corporation. c) The shareholders of the corporation's stock. d) The board of directors.
4.The P/E ratio, or price to earnings ratio of a stock, can be computed using which of the following formulas? a) (Revenue per share) ÷ (Price of stock share). b) (Price of stock share) ÷ (Revenue per share). c) (Earnings per share) ÷ (Price of stock share). d) (Price of stock share) ÷ (Earnings per share).
Explanation / Answer
1 Answer is a) banks is an example of a financial intermidiary.
this is because A financial intermediary is a financial institution such as bank, building society, insurance company, investment bank or pension fund.
A financial intermediary offers a service to help an individual/ firm to save or borrow money. A financial intermediary helps to facilitate the different needs of lenders and borrowers.
The federal reserve, the U.S. Treasury and the deparment of finance are made to help banks and not the people directly.
2.Answer is b) Interest rate is the price paid for the use of money. This is because rental rate is the price made for the use of land, profit prate is paid to the enterpreneur for investing their money for business and inflation rate is the continous price rise in the economy.
3. Answer is c) The shareholders of the corporation's stock are the owners of a corporation.
this is because The owners of a corporation have limited liability and the business has a separate legal personality from its owners so it is not liable for its debts. Those people who own the bonds issued by the corporation are the liabilities of the corporation and A corporation is owned by its shareholders, who elect a board of directors to direct the corporation and hire its managerial staff. Hence share holders are the owners and the BOD are employers to the corporation.
4) Answer is d) (Price of stock share) ÷ (Earnings per share). This is because the price-earnings ratio (P/E Ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings.
The price-earnings ratio can be calculated as:
Market Value per Share / Earnings per Share
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