Which of the following functions are performed by depository institutions?
I. They make long-term loans using short-term deposits, thereby creating liquidity.
II. They efficiently gather funds from a large base of depositors.
III. They concentrate risk.
A) I only
B) II only
C) III only
D) I and II

Question

Quizplus · Accepted Answer

Depository institutions perform the function of creating liquidity by making long-term loans using short-term deposits and efficiently gather funds from a large base of depositors. They do not concentrate risk; instead, they diversify and manage it.

Which of the Following Functions Are Performed by Depository Institutions