Financial Markets and Institutions: Match Buyers and Sellers Quiz

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Questions and Answers

The MATURITY of a debt instrument is the number of ______ until its expiration date.

years (term)

Debt instruments like bonds and mortgages involve the borrower paying fixed peso amounts at regular intervals, including ______ and principal payments.

interest

Equity instruments, such as common stock, are considered long-term securities because they have no ______ date.

maturity

The main disadvantage of owning a corporation's equities rather than its debt is that an equity holder is a ______ claimant.

residual Signup and view all the answers

Financial markets are an important source of capital for individuals who wish to buy homes or ______.

cars Signup and view all the answers

Financial markets provide price discovery, a way to determine the relative values of different items, based upon the prices at which individuals are willing to buy and ______ them.

sell Signup and view all the answers

The primary market refers to the original sale of securities by governments and ______.

corporations Signup and view all the answers

Corporations engage in two types of primary market transactions: public offerings and ______ placements.

private Signup and view all the answers

The secondary market refers to the stock market or exchange, where securities are sold to the ______.

public Signup and view all the answers

Securities brokers and dealers are crucial to a well-functioning secondary market. Brokers are agents of investors who match buyers with sellers of ______.

securities Signup and view all the answers

Financial markets are the meeting place for people, corporations and institutions that either need money or have the money to lend or invest. In a broad context, the financial markets may exist as a vast global network of individuals and financial institutions that may be lenders, borrowers or owners of public companies worldwide. Financial Markets in Action Primary Market - When a corporation uses financial markets to raise new funds, the sale of securities is said to be made in the primary market by way of a new issue. Secondary Market - After the securities are sold to the public (institutions and individuals) they are traded in the secondary market between investors. Function of Financial Market Financial markets (bond and stock markets) and financial intermediaries (banks, insurance companies among others) have the basic function of getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds. Asset valuation - Market prices offer the best way to determine the value of a firm or of the firm’s assets, or property. This is important not only to those buying and selling businesses, but also to regulators Arbitrage - Arbitrage is buying a security in one market and simultaneously selling it in another at a higher price, profiting from the temporary difference in prices. the primary market is where the ______ uses financial markets to raise new funds, the sale of securities is said to be made in the primary market by way of a new issue.

corporation Signup and view all the answers

Financial markets are the meeting place for people, corporations and institutions that either need money or have the money to lend or invest. In a broad context, the financial markets may exist as a vast global network of individuals and financial institutions that may be lenders, borrowers or owners of public companies worldwide. Financial Markets in Action Primary Market - When a corporation uses financial markets to raise new funds, the sale of securities is said to be made in the primary market by way of a new issue. Secondary Market - After the securities are sold to the public (institutions and individuals) they are traded in the secondary market between investors. Function of Financial Market Financial markets (bond and stock markets) and financial intermediaries (banks, insurance companies among others) have the basic function of getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds. Asset valuation - Market prices offer the best way to determine the value of a firm or of the firm’s assets, or property. This is important not only to those buying and selling businesses, but also to regulators Arbitrage - Arbitrage is buying a security in one market and simultaneously selling it in another at a higher price, profiting from the temporary difference in prices. When the securities are sold to the public (institutions and individuals) they are traded in the ______ between investors.

secondary market Signup and view all the answers

Financial markets are the meeting place for people, corporations and institutions that either need money or have the money to lend or invest. In a broad context, the financial markets may exist as a vast global network of individuals and financial institutions that may be lenders, borrowers or owners of public companies worldwide. Financial Markets in Action Primary Market - When a corporation uses financial markets to raise new funds, the sale of securities is said to be made in the primary market by way of a new issue. Secondary Market - After the securities are sold to the public (institutions and individuals) they are traded in the secondary market between investors. Function of Financial Market Financial markets (bond and stock markets) and financial intermediaries (banks, insurance companies among others) have the basic function of getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds. Asset valuation - Market prices offer the best way to determine the value of a firm or of the firm’s assets, or property. This is important not only to those buying and selling businesses, but also to regulators Arbitrage - Arbitrage is buying a security in one market and simultaneously selling it in another at a higher price, profiting from the temporary difference in prices. Market prices offer the best way to determine the value of a firm or of the firm’s assets, or property. This is important not only to those buying and selling businesses, but also to ______.

regulators Signup and view all the answers

Financial markets are the meeting place for people, corporations and institutions that either need money or have the money to lend or invest. In a broad context, the financial markets may exist as a vast global network of individuals and financial institutions that may be lenders, borrowers or owners of public companies worldwide. Financial Markets in Action Primary Market - When a corporation uses financial markets to raise new funds, the sale of securities is said to be made in the primary market by way of a new issue. Secondary Market - After the securities are sold to the public (institutions and individuals) they are traded in the secondary market between investors. Function of Financial Market Financial markets (bond and stock markets) and financial intermediaries (banks, insurance companies among others) have the basic function of getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds. Asset valuation - Market prices offer the best way to determine the value of a firm or of the firm’s assets, or property. This is important not only to those buying and selling businesses, but also to regulators Arbitrage - Arbitrage is buying a security in one market and simultaneously selling it in another at a higher price, profiting from the temporary difference in prices. Financial markets and financial intermediaries have the basic function of getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds. This is known as the function of ______.

financial market Signup and view all the answers

Financial markets are the meeting place for people, corporations and institutions that either need money or have the money to lend or invest. In a broad context, the financial markets may exist as a vast global network of individuals and financial institutions that may be lenders, borrowers or owners of public companies worldwide. Financial Markets in Action Primary Market - When a corporation uses financial markets to raise new funds, the sale of securities is said to be made in the primary market by way of a new issue. Secondary Market - After the securities are sold to the public (institutions and individuals) they are traded in the secondary market between investors. Function of Financial Market Financial markets (bond and stock markets) and financial intermediaries (banks, insurance companies among others) have the basic function of getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds. Asset valuation - Market prices offer the best way to determine the value of a firm or of the firm’s assets, or property. This is important not only to those buying and selling businesses, but also to regulators Arbitrage - Arbitrage is buying a security in one market and simultaneously selling it in another at a higher price, profiting from the temporary difference in prices. Buying a security in one market and simultaneously selling it in another at a higher price, profiting from the temporary difference in prices is known as ______.

arbitrage Signup and view all the answers

Financial markets are the meeting place for people, corporations and institutions that either need money or have the money to lend or invest. In a broad context, the financial markets may exist as a vast global network of individuals and financial institutions that may be lenders, borrowers or owners of public companies worldwide. Financial Markets in Action Primary Market - When a corporation uses financial markets to raise new funds, the sale of securities is said to be made in the primary market by way of a new issue. Secondary Market - After the securities are sold to the public (institutions and individuals) they are traded in the secondary market between investors. Function of Financial Market Financial markets (bond and stock markets) and financial intermediaries (banks, insurance companies among others) have the basic function of getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds. Asset valuation - Market prices offer the best way to determine the value of a firm or of the firm’s assets, or property. This is important not only to those buying and selling businesses, but also to regulators Arbitrage - Arbitrage is buying a security in one market and simultaneously selling it in another at a higher price, profiting from the temporary difference in prices. Getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds is known as the function of ______.

financial intermediaries Signup and view all the answers

The secondary market refers to the stock market or exchange, where securities are sold to the ______.

public Signup and view all the answers

Corporations engage in two types of primary market transactions: public offerings and ______ placements.

private Signup and view all the answers

The primary market is where the ______ uses financial markets to raise new funds, the sale of securities is said to be made in the primary market by way of a new issue.

corporation Signup and view all the answers

When the securities are sold to the public (institutions and individuals) they are traded in the ______ between investors.

secondary market Signup and view all the answers

Debt instruments like bonds and mortgages involve the borrower paying fixed peso amounts at regular intervals, including ______ and principal payments.

interest Signup and view all the answers

Financial markets provide price discovery, a way to determine the relative values of different items, based upon the prices at which individuals are willing to buy and ______ them.

sell Signup and view all the answers

Equity instruments, such as common stock, are considered long-term securities because they have no ______ date.

maturity Signup and view all the answers

Buying a security in one market and simultaneously selling it in another at a higher price, profiting from the temporary difference in prices is known as ______.

arbitrage Signup and view all the answers

Financial markets and financial intermediaries have the basic function of getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds. This is known as the function of ______.

intermediaries Signup and view all the answers

Debt instruments like bonds and mortgages involve the borrower paying fixed peso amounts at regular intervals, including ______ and principal payments.

interest Signup and view all the answers

The MATURITY of a debt instrument is the number of ______ until its expiration date.

years Signup and view all the answers

The main disadvantage of owning a corporation's equities rather than its debt is that an equity holder is a ______ claimant.

residual Signup and view all the answers

Securities brokers and dealers are crucial to a well-functioning secondary market. Brokers are agents of investors who match buyers with sellers of ______.

securities Signup and view all the answers

The secondary market refers to the stock market or exchange, where securities are sold to the ______.

public Signup and view all the answers

Financial markets provide price discovery, a way to determine the relative values of different items, based upon the prices at which individuals are willing to buy and ______ them.

sell Signup and view all the answers

When the securities are sold to the public (institutions and individuals) they are traded in the ______ between investors.

secondary market Signup and view all the answers

Study Notes

Debt Instruments

Maturity of a debt instrument is the number of years until its expiration date.
Debt instruments like bonds and mortgages involve the borrower paying fixed peso amounts at regular intervals, including interest and principal payments.

Equity Instruments

Equity instruments, such as common stock, are considered long-term securities because they have no expiration date.
The main disadvantage of owning a corporation's equities rather than its debt is that an equity holder is a junior claimant.