Accounting Multiple Choice Question – 11 February 2025

Which of the following is generally a function of regulators?

Select ONE answer:

1. The provision of investment advice and information to businesses
2. Reduction of risk for clients via aggregation of funds
3. Maturity transformation
4. Prudential control of financial institutions

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct == > Prudential control refers to the regulation and monitoring of banks and other financial institutions by the Bank of England, the Treasury etc. It is financial intermediaries, not regulators, which provide advice and information to investors on available investment opportunities and their associated risks and returns. Intermediaries reduce investment risks for individuals by creating an investment portfolio. Maturity transformation overcomes the problem of matching the time periods for which a company or individual needs funds with the time periods over which investors wish to invest.

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