Financial Markets and Business Organizations
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Questions and Answers

What are the primary types of financial securities?

  • Derivatives, commodities, and bonds
  • Debt, equity, and derivatives (correct)
  • Stocks, bonds, and options
  • Equity, commodities, and futures

    • What is a required rate of return from an investor’s perspective?

  • The time preferences for consumption
  • The prospect of more money in the future (correct)
  • The cost of money from the user’s point of view
  • The risk associated with an investment

    • What are spot markets and futures markets based on?

  • Whether the assets are bought or sold for on-the-spot delivery or for delivery at some future date (correct)
  • The type of investors participating in the markets
  • The location where the assets are bought or sold
  • The type of assets being traded

    • What are primary markets?

    <p>Markets in which corporations raise new capital</p> Signup and view all the answers

    What is a trading venue?

    <p>A site where secondary market trading occurs</p> Signup and view all the answers

    What is the primary objective of management according to the text?

    <p>Maximizing stockholders’ wealth</p> Signup and view all the answers

    What is the initial public offering (IPO) related to?

    <p>Selling shares to the general public for the first time</p> Signup and view all the answers

    What does free cash flow (FCF) represent?

    <p>Cash flow available for distribution to investors after sustaining operations</p> Signup and view all the answers

    What determines the weighted average cost of capital (WACC)?

    <p>The firm’s capital structure, interest rates, and market share</p> Signup and view all the answers

    What are financial markets primarily used for according to the text?

    <p>Connecting providers of cash with users of cash</p> Signup and view all the answers

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