Question

Match the financial institution to its role. take deposits and make loans manage a pool of money that is designated to be paid out to beneficiaries when they are in retirement

1. Commercial banks
2. Mutual funds help businesses, governments, and institutions to raise funds to
3. Pension funds finance their activities by issuing securities
4. Investment banks purchase a portfolio of assets for a group of investors

Answer 1

1. Commercial banks - take deposits and make loans

Commercial banks create loans from the money deposited with them. They then earn interest on these loans and give the depositors some of the interest revenue depending on the type of account opened.

2. Mutual funds - purchase a portfolio of assets for a group of investors

Mutual funds pool money from multiple investors and then purchase a portfolio of assets. Profits made are divided amongst its investors.

3. Pension funds - manage a pool of money that is designated to be paid out to beneficiaries when they are in retirement.

Pension funds are meant to provide money to beneficiaries in retirement so they manage a pool of money that beneficiaries had invested into before they retired.

4. Investment banks - help businesses, governments, and institutions to raise funds to finance their activities by issuing securities.

Investment firms are mostly underwriters who help businesses, governments and other institutions raise funds to finance their activities.