1. Which of the following is a primary function of a financial system?

A. Production of goods and services

B. Allocation of financial resources b
C. Marketing of products
D. Human resource management

2. What is the main role of financial intermediaries?

A. To act as a bridge between savers and borrowers A
B. To manufacture financial products
C. To oversee monetary policy
D. To regulate stock exchanges

3. Which of the following is NOT a component of the financial system?

A. Financial institutions
B. Financial markets
C. Financial instruments
D. Manufacturing industries D

4. What is the primary function of a stock exchange?

A. To lend money to businesses
B. To facilitate the buying and selling of securities B
C. To issue government bonds
D. To provide loans to individuals

5. Which of the following is considered a money market instrument?

A. Corporate bond
B. Treasury bill B
C. Common stock
D. Real estate investment trust (REIT)

6. Which of the following institutions primarily accepts deposits and provides loans?
A. Insurance companies
B. Commercial banks B
C. Investment banks
D. Stock exchanges

7. What is the main purpose of the central bank in a financial system?

 A. To create financial products A
B. To manage the nation's currency and monetary policy
C. To insure deposits
D. To regulate individual investments

8. Which of the following is an example of a derivative instrument?

A. Savings account
B. Stock option B
C. Certificate of deposit (CD)
D. Mutual fund

9. Which of the following is a characteristic of the capital market?

A. Short-term borrowing and lending
B. Long-term investment and financing B
C. Daily banking operations
D. Insurance and risk management

10. In a financial system, what does the term 'liquidity' refer to?
A. The amount of cash a company has
B. The ease with which an asset can be converted into cash B
C. The profitability of financial institutions
D. The volatility of stock prices