CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 77 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam

Question #: 77
Topic #: 1

Central banks inspect and sometimes set minimum limits on the reserves held by commercial banks. Which ONE of the following statements is NOT a reason that central banks seek to influence the reserves of commercial banks?

ATo influence commercial banks' ability to create credit

BTo avoid the commercial banks running out of liquidity

CTo regulate the profits of commercial banks

DTo prevent the collapse of the banking system

Show Suggested Answer

Suggested Answer: D

by Elli at Nov 25, 2023, 05:03 PM

Limited Time Offer

25%

Off

Get Premium CIMAPRA17-BA1-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Dean

2 months ago

Option C is the right answer, no doubt. Central banks have bigger fish to fry than worrying about commercial bank profits.

upvoted 0 times

Isaac

13 days ago

C) To regulate the profits of commercial banks

upvoted 0 times

...

Candra

16 days ago

B) To avoid the commercial banks running out of liquidity

upvoted 0 times

...

Marjory

26 days ago

A) To influence commercial banks' ability to create credit

upvoted 0 times

...

Sommer

2 months ago

Ha! Imagine a central bank being like, 'Yeah, we just want to make sure you guys aren't making too much money over there.' Definitely not the reason.

upvoted 0 times

Marci

5 days ago

D) To prevent the collapse of the banking system

upvoted 0 times

...

Linwood

9 days ago

C) To regulate the profits of commercial banks

upvoted 0 times

...

Delmy

20 days ago

B) To avoid the commercial banks running out of liquidity

upvoted 0 times

...

Oneida

2 months ago

A) To influence commercial banks' ability to create credit

upvoted 0 times

...

Ben

2 months ago

I'd go with Option C as the correct answer. Central banks are more concerned with financial stability, not commercial bank profits.

upvoted 0 times

...

Man

2 months ago

That makes sense, central banks want to ensure stability in the banking system.

upvoted 0 times

...

Yuki

2 months ago

I disagree, I believe the answer is D) To prevent the collapse of the banking system.

upvoted 0 times

...

Jean

2 months ago

Option C seems like a strange one. Regulating the profits of commercial banks? I don't think that's a primary reason for central bank reserve requirements.

upvoted 0 times