The Financial System(All accurately solved)

What is the financial system? correct answers The financial system is the process by which funds are transferred between those having excess funds(savers) and those needing additional funds(users). In the financial system, whoa re the borrower and who are the savers? correct answers Savers and borrower are individuals, businesses, and governments. Generally, individuals are net savers, meaning they spend less than they make, whereas businesses and governments are net borrowers. List the two most common ways in which funds are transferred between borrowers and savers. correct answers The two most common ways funds are transferred are through the financial markets and through financial institutions. What are he major types of securities? correct answers The major types of securities are money market instruments, bonds, and stock. What is a government bond?A municipal bond? correct answers A government bond is one issued by the U.S. Treasury. Municipal bonds are issued by state and local governments. Why do investors purchase common stock? correct answers There are two primary motives for purchasing common stock. One is to receive dividends, cash payments to shareholders by the firm. The other is potential price appreciation of the shares. What is a financial market? correct answers A financial market is a market in which securities are bought and sold. Distinguish between a primary and a secondary financial market. correct answers The primary market for securities serves businesses ad governments that want to sell new security issues to raise funds. The secondary markets handles transactions of previously issued securities between investors. Briefly explain the role of financial institutions in the sale of securities. correct answers Financial institutions purchase new securities issues from corporations or state and local governments and then resell the securities to investors. The institutions charge a fee for their services. What are the world's two largest stock markets? correct answers The world's two largest stock markets are the New York Stock Exchange and the Nasdaq Stock Market. Why is the London Stock Exchange unique? correct answers The London Stock Exchange is probably the most international of the world's stock markets because a large percentage of the shares traded are not those of British firms.