Podcast
Questions and Answers
What is the function of financial markets?
What is the function of financial markets?
- To save surplus funds
- To channel funds from borrowers to lenders
- To channel funds from savers to those with a shortage of funds (correct)
- To issue securities to individuals and firms
In direct finance, how do borrowers obtain funds from lenders?
In direct finance, how do borrowers obtain funds from lenders?
- By selling their future income or assets
- By obtaining loans from financial intermediaries
- By issuing securities in financial markets (correct)
- By transferring funds through money markets
What is the nature of securities for the person who buys them?
What is the nature of securities for the person who buys them?
- Liabilities
- Equity
- Debts
- Assets (correct)
How is finance carried out in the financial markets?
How is finance carried out in the financial markets?
What are the two classifications of financial markets mentioned in the text?
What are the two classifications of financial markets mentioned in the text?
How can a firm obtain funds in a financial market?
How can a firm obtain funds in a financial market?
What is the defining characteristic of a debt instrument with a maturity between one and ten years?
What is the defining characteristic of a debt instrument with a maturity between one and ten years?
In which market are only short-term debt instruments traded?
In which market are only short-term debt instruments traded?
What is the function of an investment bank in the primary market?
What is the function of an investment bank in the primary market?
What is the primary function of financial intermediaries as mentioned in the text?
What is the primary function of financial intermediaries as mentioned in the text?
What type of securities are typically more liquid and less prone to price fluctuations?
What type of securities are typically more liquid and less prone to price fluctuations?
In which market are longer-term debt and equity instruments traded?
In which market are longer-term debt and equity instruments traded?
What is a contractual agreement by the borrower to pay the holder fixed money amounts at regular intervals until a specified date called?
What is a contractual agreement by the borrower to pay the holder fixed money amounts at regular intervals until a specified date called?
What is the primary function of an investment bank in the primary market?
What is the primary function of an investment bank in the primary market?
Which financial market has the characteristic that it is not well known to the public because initial sales occur behind closed doors?
Which financial market has the characteristic that it is not well known to the public because initial sales occur behind closed doors?
What is the nominal interest rate?
What is the nominal interest rate?
According to the Fisher equation, how is the nominal interest rate related to the real interest rate and the expected rate of inflation?
According to the Fisher equation, how is the nominal interest rate related to the real interest rate and the expected rate of inflation?
What does the real interest rate reflect?
What does the real interest rate reflect?
What is the primary function of the present value in finance?
What is the primary function of the present value in finance?
In finance, what does a debt instrument involve?
In finance, what does a debt instrument involve?
What do debt instruments have that makes them different from each other?
What do debt instruments have that makes them different from each other?
What is the formula for calculating the future value of a loan after one year?
What is the formula for calculating the future value of a loan after one year?
What does the term 'discounting the future' refer to?
What does the term 'discounting the future' refer to?
What is the nominal interest rate?
What is the nominal interest rate?
What is the Fisher equation used to calculate?
What is the Fisher equation used to calculate?
What is the primary function of financial intermediaries?
What is the primary function of financial intermediaries?
What does the real interest rate reflect?
What does the real interest rate reflect?
Which market are longer-term debt and equity instruments typically traded in?
Which market are longer-term debt and equity instruments typically traded in?
What is the cost of borrowing money known as?
What is the cost of borrowing money known as?
What does 'discounting the future' allow us to compare?
What does 'discounting the future' allow us to compare?
What does the nominal interest rate equal according to the Fisher equation?
What does the nominal interest rate equal according to the Fisher equation?
