What is the main function of a commercial bank when it accepts deposits and provides loans?
Correct answer: A. Financial intermediation
- A. Financial intermediation
- B. Currency depreciation
- C. Fiscal taxation
- D. Trade protection
Explanation
Financial intermediation means transferring funds from savers to borrowers through institutions such as commercial banks. Taxation and trade protection are government functions, not the basic role described here.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Finance and Banking Basics
Business finance covers capital requirements, sources of funds, budgeting, cash flow, investment decisions and basic financial statements and ratios. Banking includes commercial bank functions, deposits, loans, credit creation, interest and the role of a central bank, including its monetary policy and regulatory functions.
Practise Finance and Banking Basics
30 free Finance and Banking Basics MCQs from Introduction to Business, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Introduction to Business questions like this
Introduction to Business is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
More Finance and Banking Basics questions
If Rs. 10,000 earns compound interest at 10 percent per year for two years, what is the maturity value?
Which asset is generally considered the most liquid?
Which institution is the central bank of Pakistan?
What is the usual effect of inflation on the purchasing power of money?
What does the coupon rate on a bond usually represent?
A project with a positive net present value generally should be accepted because it: