Question

Q1. Which statement is not correct?.Regulators seek to provide protection to depositors at financial institutions because deposits are:

a. the main source of funding for banks

b. the primary form of savings for individuals and loss of deposits causes significant hardship for depositors

c. a preferable form of high risk investments

d. a critical part of the financial system as they facilitate economic transactions.

Q2. The delta of an option refers to the change in the value of an:

a. underlying security for a large unit change in the price of the option

b. option for a large unit change in the price of the underlying security

c. underlying security for a small unit change in the price of the option

d. option for a small unit change in the price of the underlying security

Answer 1

The correct answer is 3rd one.

a preferable form of high risk investments.

This statement is not true as the deposits are form low risk investments for a depositor. When a depositor deposit his savings in a bank he considers it as the safest form of investment.

Other options are true for which regulators provide protection to depositors at financial institutions.

--> Deposits are indeed a main source of funding for banks. The bank credits multiple times credit with the deposit. It is main source of funding for bank.

--> Deposits are primary form of savings for individuals. The deposits at banks are considered as the most trusted form of investment for individual. The cash at bank is considered as cash equivalent. The loss of deposit will cause significant hardship for depositors.

--> Deposits facilitates economic transactions. Economic transaction is transaction where there is transfer of goods , services, money etc. Deposits do facilitates economic transactions.

Hope it helps!