LIBF-Unit 4 Questions And Answers With Complete Solutions 2023 competition and markets authority - Correct Answer The body responsible for strengthening business competition and preventing and reducing anti-competitive activities.counterparties - Correct Answer People and organisations (eg companies) who lend money to and borrow from financial intermediaries (ie financial institutions such as banks) divestment - Correct Answer The process of selling off parts of a company to make it smaller, eg the Lloyds sell-off that created new TSB branches.financial intermediary - Correct Answer A financial institution that facilitates the process of lending and borrowing, by taking deposits from those with a surplus and lending those funds out to those who need to borrow.financial intermediation - Correct Answer The process of taking in deposits from those with a surplus and lending those funds out to those who need to borrow (see financial intermediary).financial policy committee - Correct Answer A part of the Bank of England that monitors and responds to risk posed to the entire financial services market. Its focus on the whole market makes it a macro-prudential authority.friendly society - Correct Answer A mutual organisation that offers its members a wide range of financial products, which can include savings, investments, insurance, pensions and annuities.hm treasury - Correct Answer Her Majesty's (HM) Treasury, the government department responsible for development and implementation of financial and economic policy.investment banks - Correct Answer Banks that raise funds on the financial markets, rather than accepting deposits as a retail bank does. They use these funds to provide special services to large corporations and to governments. Also known as wholesale banks.lloyd's insurance market - Correct Answer An insurance marketplace where members (corporations and individuals) employ underwriters to come together and accept insurance risk, dividing it out between the members.long-term capital markets - Correct Answer Financial markets where long-term debt (ie bonds) and shares in the bank (equity) are bought and sold. This provides a source of funding for banks. 1 / 2
monetary policy - Correct Answer The manipulation of interest rates to maintain low inflation.monetary policy committee - Correct Answer The Bank of England committee responsible for keeping inflation under control by the manipulation of interest rates.oligopoly - Correct Answer A market dominated by a few large firms, eg the financial services sector.peer-to-peer lenders - Correct Answer Online marketplaces that enable people to lend to and borrow from each other without using a traditional financial institution such as a bank or building society.retail banks - Correct Answer Banks that deal directly with consumers, eg providing current accounts and mortgages.retail ring-fencing - Correct Answer Separating the deposit-taking part of a bank or building society from the rest of its business so that, in the event of financial difficulties, the ring- fenced deposits of retail customers cannot be used to pay the debts of the more risky investment section of the bank.short-term money markets - Correct Answer Financial markets where banks borrow over short periods (ie months, weeks or even days), especially from the interbank market, where banks with short-term surpluses lend to banks with short-term deficits.bad competition - Correct Answer Where there is a small number of large, powerful providers on the market that only aim to maximise their sales, which may result in mis- selling and a lack of differentiation in products.barriers to entry - Correct Answer The features of the market that make it difficult for new firms to enter and compete.barriers to expansion - Correct Answer The features of the market that make it difficult for new firms to grow.competitive market - Correct Answer A market where there is a large number of sellers and where no one of these is so big that it can dominate the market.concentration ratio - Correct Answer The percentage of a particular market accounted for by a certain number of firms.customer inertia - Correct Answer The idea that customers are reluctant to change their financial services provider and therefore tend not to challenge poor service.
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