• 1 Marks

BMF – Nov 2021 – L1 – SA – Q19 – Basics of Business Finance and Financial Markets

Question on identifying the key role of banks as financial intermediaries.

Banks are important financial intermediaries because they:

A. Create new debt
B. Are the only source of debt finance
C. Are the only source of long-term finance
D. Operate between investors and borrowers
E. Take deposits from all their customers

D. Operate between investors and borrowers

Explanation:
The correct answer is D because banks act as intermediaries by connecting those who have funds (investors) with those who need them (borrowers). This role facilitates the efficient allocation of resources in the financial market, allowing for investment and economic growth

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