Question

The major purpose of a financial system is to

a. trade stocks and bonds.

b. regulate banks.

c. print money and checks

d. match savers with borrowers

Answer 1

d. match savers with borrowers

There are various players in the market such as the investors who make the investments in bonds, stocks, etc.; a lender such as a Bank, Non-banking Financial Institutions, etc. who advances this money to the parties who is in need of the same and the Borrowers such as individuals, Companies, etc. who borrow the money from the Lenders to meet various financial obligations or motives. Together, the coverage of the financial transactions in a definite system is called as a Financial system that constantly channelizes the efforts to ensure that there is a bridging of the gap between the savers with borrowers. This can be undertaken in various ways but primarily by the activities of the Financial institutions, especially with that of their investments activities. Hence option D is true because it covers in fact, all other options mentioned above, within it.