FINANCIAL MARKETS AND INSTITUTIONS
FINAL PAPER TESTED QUESTIONS WITH
VERIFIED ANSWERS COMPLETE STUDY
SHEET
●● Who are surplus units in financial markets?
Answer: Participants who receive more money than they spend, such as
investors.
●● Who are deficit units in financial markets?
Answer: Participants who spend more money than they receive, such as
borrowers.
●● What are securities?
Answer: Financial assets that represent a claim on the issuers, including
debt and equity securities.
●● What are debt securities?
Answer: Securities that represent borrowed funds incurred by the issuer.
●● What are equity securities?
Answer: Securities that represent ownership in a firm, commonly known
as stocks.
, ●● What is the role of financial institutions in financial markets?
Answer: To act as intermediaries connecting surplus units with deficit
units.
●● What distinguishes primary markets from secondary markets?
Answer: Primary markets facilitate the issuance of new securities, while
secondary markets facilitate the trading of existing securities.
●● What is liquidity in the context of financial markets?
Answer: The degree to which securities can be easily sold without a loss
of value.
●● What are money market securities?
Answer: Short-term debt securities with a maturity of one year or less.
●● What are capital market securities?
Answer: Long-term securities sold by deficit units to surplus units.
●● What types of securities are included in capital markets?
Answer: Bonds, mortgages, mortgage-backed securities, and stocks.
●● What are derivative securities?
FINAL PAPER TESTED QUESTIONS WITH
VERIFIED ANSWERS COMPLETE STUDY
SHEET
●● Who are surplus units in financial markets?
Answer: Participants who receive more money than they spend, such as
investors.
●● Who are deficit units in financial markets?
Answer: Participants who spend more money than they receive, such as
borrowers.
●● What are securities?
Answer: Financial assets that represent a claim on the issuers, including
debt and equity securities.
●● What are debt securities?
Answer: Securities that represent borrowed funds incurred by the issuer.
●● What are equity securities?
Answer: Securities that represent ownership in a firm, commonly known
as stocks.
, ●● What is the role of financial institutions in financial markets?
Answer: To act as intermediaries connecting surplus units with deficit
units.
●● What distinguishes primary markets from secondary markets?
Answer: Primary markets facilitate the issuance of new securities, while
secondary markets facilitate the trading of existing securities.
●● What is liquidity in the context of financial markets?
Answer: The degree to which securities can be easily sold without a loss
of value.
●● What are money market securities?
Answer: Short-term debt securities with a maturity of one year or less.
●● What are capital market securities?
Answer: Long-term securities sold by deficit units to surplus units.
●● What types of securities are included in capital markets?
Answer: Bonds, mortgages, mortgage-backed securities, and stocks.
●● What are derivative securities?
