Financial Markets Overview

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Questions and Answers

What is the primary function of financial markets?

  • To ensure economic activity by facilitating access to funds (correct)
  • To provide liquidity to investors
  • To guarantee fixed interest rates for borrowers
  • To control government spending

Who are the users of funds in the financial markets?

  • Only businesses
  • Businesses, governments, and households (correct)
  • Only households
  • Only financial institutions

What role do intermediaries like banks and mutual funds play in financial markets?

  • They regulate government spending
  • They channelize surplus funds from lenders to users (correct)
  • They consume surplus funds
  • They provide funds to users directly

What is one of the requirements for an efficient financial market?

<p>Allowing participants to review their funding decisions based on new information (B)</p> Signup and view all the answers

Why is aggregation of funds from a large number of investors important in financial markets?

<p>To make funds available for productive economic activity (A)</p> Signup and view all the answers

What is the significance of providing liquidity and exit options in financial markets?

<p>To ensure participants can easily sell assets and exit investments if needed (B)</p> Signup and view all the answers

What is the main focus of financial market regulations and regulators?

<p>Setting up systems and processes to streamline fund transfer activities (C)</p> Signup and view all the answers

Which of the following is NOT included in the definition of 'Securities' as per the SCRA, 1956?

<p>Mortgage loans (B)</p> Signup and view all the answers

What is the role of securities markets in transferring resources?

<p>Enhancing savings and investment by connecting savers with investors (C)</p> Signup and view all the answers

Which of the following is NOT considered a type of 'Securities' under the SCRA, 1956?

<p>Commodities futures (D)</p> Signup and view all the answers

What does decoupling savings from investments mean in the context of securities markets?

<p>Allowing savers and investors to be limited by the economy's abilities instead of individual capacities (B)</p> Signup and view all the answers

What do securities markets provide channels for?

<p>Allocation of savings to investments (B)</p> Signup and view all the answers

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