Question

Now more than ten years after the financial crisis, the largest funding source for a securities firm is again

	a.	short positions in securities and commodities
	b.	payables to other broker dealers
	c.	securities sold under repurchase agreements
	d.	securities purchased under agreements to sell

Answer 1

Since the financial markets are interrelated so the largest funding source of a security firm is payables to other brokers or dealers.

This type of funding lead to a crisis related to 2008 depression because fall of one institution led to fall of other because of good loans turning bad as there were lot of funding received from other brokers and dealers.

option( C) and option( D) are Repo arrangements and reverse repo arrangement and they are not the source of largest funding. Largest funding source is also not going short in commodities and futures.

So the correct answer would be option( B)