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AFM 121 MIDTERM EXAM LATEST EXAM 2025 | ALL
QUESTIONS AND CORRECT ANSWERS | ALREADY
GRADED A+ | BRAND NEW VERSION
What is the vital function of financial markets? - (answers)Help facilitate transfer
of capital
What are the three components of the wealth transfer process? -
(answers)Financial instruments (what is actually bought / sold)
Financial markets (facilitating / buying financial instruments)
Financial intermediaries (people / companies involved in financial instruments
and markets)
What is capital made up of? - (answers)Capital is made up of governments,
corporations and individuals
How is capital transferred? - (answers)Direct investment (land, real estate)
Indirect investment (stocks, bonds, t-bills)
When will people transfer capital? - (answers)When it is easy, cheap, and
generates a good return
What does capital flow depend on? - (answers)Political environment
Economic trends
Fiscal and Monetary policy
Investment opportunities
Labour force (highly educated / laws governing rights of labour force)
Who provides capital? - (answers)Retail investors (individuals that buy retail)
Institutional Investors (pension funds and mutual funds)
Foreign investors (can include foreign retail, institutional and government
investors)
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Who uses capital? - (answers)Companies and businesses (earn money through
internally through existing operations and reinvest the money) (raise money by
issuing stocks/bonds)
Government (t bills, longer term debt) (spend on all forms of government
spending that aren't covered by tax and other revenues)
What are the different kinds of financial instruments? - (answers)Debt
Equity
Investment Funds
Derivatives
Private equity
What makes a market efficient? - (answers)Fast
Cheap
Liquid
What are primary markets? - (answers)Securities are sold by issuers for the first
time
Issuer receives money from this sale
What are secondary markets? - (answers)Where securities previously issued are
bought and sold
Funds do not go to issuer
How are regulations set for financial intermediaries? - (answers)Regulations are
meant to be structured such that market efficiency is a by-product of this self
interest
What are auction markets? - (answers)Where all transaction converge in one
location (TSX, TSX Venture Exchange)
How does a stock exchange make money? - (answers)Transaction fees
Initial listing fees
AFM 121 MIDTERM EXAM LATEST EXAM 2025 | ALL
QUESTIONS AND CORRECT ANSWERS | ALREADY
GRADED A+ | BRAND NEW VERSION
What is the vital function of financial markets? - (answers)Help facilitate transfer
of capital
What are the three components of the wealth transfer process? -
(answers)Financial instruments (what is actually bought / sold)
Financial markets (facilitating / buying financial instruments)
Financial intermediaries (people / companies involved in financial instruments
and markets)
What is capital made up of? - (answers)Capital is made up of governments,
corporations and individuals
How is capital transferred? - (answers)Direct investment (land, real estate)
Indirect investment (stocks, bonds, t-bills)
When will people transfer capital? - (answers)When it is easy, cheap, and
generates a good return
What does capital flow depend on? - (answers)Political environment
Economic trends
Fiscal and Monetary policy
Investment opportunities
Labour force (highly educated / laws governing rights of labour force)
Who provides capital? - (answers)Retail investors (individuals that buy retail)
Institutional Investors (pension funds and mutual funds)
Foreign investors (can include foreign retail, institutional and government
investors)
, 2|Page
Who uses capital? - (answers)Companies and businesses (earn money through
internally through existing operations and reinvest the money) (raise money by
issuing stocks/bonds)
Government (t bills, longer term debt) (spend on all forms of government
spending that aren't covered by tax and other revenues)
What are the different kinds of financial instruments? - (answers)Debt
Equity
Investment Funds
Derivatives
Private equity
What makes a market efficient? - (answers)Fast
Cheap
Liquid
What are primary markets? - (answers)Securities are sold by issuers for the first
time
Issuer receives money from this sale
What are secondary markets? - (answers)Where securities previously issued are
bought and sold
Funds do not go to issuer
How are regulations set for financial intermediaries? - (answers)Regulations are
meant to be structured such that market efficiency is a by-product of this self
interest
What are auction markets? - (answers)Where all transaction converge in one
location (TSX, TSX Venture Exchange)
How does a stock exchange make money? - (answers)Transaction fees
Initial listing fees
