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Which of the following would best describe the role of a merchant bank? (A) To monitor the activities of publicly-listed companies (B) To act as banker and financial agent to the federal government (C) To provide borrowing and lending services, primarily to the business sector (D) To provide loans to the corporate sector through receipts of insurance premiums - HSC - SSCE Business Studies - Question 6 - 2003 - Paper 1
Question 6
Which of the following would best describe the role of a merchant bank? (A) To monitor the activities of publicly-listed companies (B) To act as banker and financial... show full transcript
Worked Solution & Example Answer:Which of the following would best describe the role of a merchant bank? (A) To monitor the activities of publicly-listed companies (B) To act as banker and financial agent to the federal government (C) To provide borrowing and lending services, primarily to the business sector (D) To provide loans to the corporate sector through receipts of insurance premiums - HSC - SSCE Business Studies - Question 6 - 2003 - Paper 1
Step 1
To provide borrowing and lending services, primarily to the business sector
Answer
The role of a merchant bank primarily focuses on providing financial services to businesses rather than individuals. Merchant banks specialize in offering capital to companies in the form of loans and facilitating corporate financing, mergers, and acquisitions. Their services are particularly targeted at the business sector, making option (C) the most accurate description of a merchant bank's role.