In a modern market economy, financial intermediaries such as commercial banks perform several essential functions to facilitate the flow of funds. Which of the following best describes the process of 'maturity transformation'?
Converting short-term liabilities (such as liquid deposits from savers) into long-term assets (such as mortgages and business loans)
Aligning the risk profiles of risk-averse savers with high-risk corporate investment opportunities through securitisation
Directly matching individual savers with specific corporate borrowers to eliminate the spread between deposit and lending rates
Adjusting interest rates on commercial loans automatically in response to changes in the central bank's policy rate
18 exam-style questions on OCR A Level Economics The financial sector. Each one has a worked solution and a mark scheme showing where the marks go.