AFM 121 Midterm questions well answered to
pass
1. What is the vital function of
finan- cial markets? Help facilitate transfer of capital
2. What are the three components of Financial instruments (what is actually bought /
sold)
the wealth transfer process?
Financial markets (facilitating / buying financial
instru- ments)
Financial intermediaries (people / companies involved
in financial instruments and markets)
3. What is capital made up of? Capital is made up of governments, corporations
and
individuals
4. How is capital transferred? Direct investment (land, real estate)
Indirect investment (stocks, bonds, t-bills)
5. When will people transfer capital? When it is easy, cheap, and generates a good
return
6. What does capital flow depend on? Political environment
Economic trends
Fiscal and Monetary policy
Investment opportunities
Labour force (highly educated / laws governing
rights of labour force)
7. Who provides capital? Retail investors (individuals that buy retail)
Institutional Investors (pension funds and
mutual funds)
1/
21
,AFM 121 Midterm questions well answered to
pass
Foreign investors (can include foreign retail,
institutional and government investors)
2/
21
, AFM 121 Midterm questions well answered to
pass
8. Who uses capital? Companies and businesses (earn money
through inter- nally through existing operations
and reinvest the mon- ey) (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)
9. What are the different kinds of
fi- nancial instruments? Debt
Equity
Investment
Funds
Derivatives
Private equity
10. What makes a market efficient? Fast
Cheap
Liquid
11. What are primary markets? Securities are sold by issuers for the first time
Issuer receives money from this sale
12. What are secondary markets? Where securities previously issued are bought
and sold
Funds do not go to issuer
13. How are regulations set for
finan- cial intermediaries? Regulations are meant to be structured such that
market eflciency is a by-product of this self
interest
3/
21
pass
1. What is the vital function of
finan- cial markets? Help facilitate transfer of capital
2. What are the three components of Financial instruments (what is actually bought /
sold)
the wealth transfer process?
Financial markets (facilitating / buying financial
instru- ments)
Financial intermediaries (people / companies involved
in financial instruments and markets)
3. What is capital made up of? Capital is made up of governments, corporations
and
individuals
4. How is capital transferred? Direct investment (land, real estate)
Indirect investment (stocks, bonds, t-bills)
5. When will people transfer capital? When it is easy, cheap, and generates a good
return
6. What does capital flow depend on? Political environment
Economic trends
Fiscal and Monetary policy
Investment opportunities
Labour force (highly educated / laws governing
rights of labour force)
7. Who provides capital? Retail investors (individuals that buy retail)
Institutional Investors (pension funds and
mutual funds)
1/
21
,AFM 121 Midterm questions well answered to
pass
Foreign investors (can include foreign retail,
institutional and government investors)
2/
21
, AFM 121 Midterm questions well answered to
pass
8. Who uses capital? Companies and businesses (earn money
through inter- nally through existing operations
and reinvest the mon- ey) (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)
9. What are the different kinds of
fi- nancial instruments? Debt
Equity
Investment
Funds
Derivatives
Private equity
10. What makes a market efficient? Fast
Cheap
Liquid
11. What are primary markets? Securities are sold by issuers for the first time
Issuer receives money from this sale
12. What are secondary markets? Where securities previously issued are bought
and sold
Funds do not go to issuer
13. How are regulations set for
finan- cial intermediaries? Regulations are meant to be structured such that
market eflciency is a by-product of this self
interest
3/
21
