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 and II
B) I only
C) III only
D) II only

Question

Quizplus · Accepted Answer

Depository institutions perform the function of gathering funds from a large base of depositors efficiently and making long-term loans using short-term deposits, thereby creating liquidity. However, they do not concentrate risk as they diversify their loan portfolio.

Which of the Following Functions Are Performed by Depository Institutions