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Which of the following is not a key feature of banking in the EU? European banks are allowed to engage in securities m...

Which of the following is not a key feature of banking in the EU?

  1. European banks are allowed to engage in securities markets.

  2. European banks are generally significant shareholders in European companies.

  3. European banks rely much more on equity than deposits.

  4. Regulation covers bank exposures to sovereigns.

  5. None of the answers.

Which type of financial intermediary is more highly exposed to liquidity risk?

  1. Property-casualty insurance companies.

  2. Life insurance companies.

  3. Mutual funds.

  4. Depository institutions.

  5. Pension funds.

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Answer #1

1) Solution: European banks are generally significant shareholders in European companies

Explanation: European banks can engage in securities markets and often rely mainly on equity. However are not the significant shareholders in European companies

2) Solution: Depository institutions

Explanation: The liquidity risk is a risk of being unable to sell or buy assets in a given size over a given time frame without adversely affecting the asset's price. Depository institutions are considered to be the most exposed to liquidity risk

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