Financial Markets, Money Markets, and Institutions

fiscal MARKETS, MONEY MARKETS, AND INSTITUTIONSQ1. A Financial intermediary is an existence that bridges in the midst of user & provider of pay. Which of the following is/ be a pecuniary intermediary? (MRQ) Venture CapitalistInsurance institutionsCredit joints technical Banks(2 marks)Q2. Which of the following is a money commercialise legal instrument? (MCQ)Corporate BondTreasury BillsDebenturesStocks(2 marks)Q3. Faust Co trades agricultural products & oils in its foodstuffs. Which type of merchandise is Faust Co most likely in? (MCQ) gold grocerysDerivatives marketCommodity marketsInsurance markets(2 marks)Q4. Which of the following is a difference in primary & secondary markets? (MCQ)secondary winding markets relate to the trading of securities at the initial offeringPrimary & Secondary markets deals in the sale of securitiesThe primary market is used by newly worldly concern limited entitiesPrimary markets deal initial offerings & Secondary markets deals in alert inv estments (2 marks)Q5. The conversion of illiquid assets into marketable securities is known as? (MCQ)FuturesSecuritizationEuro currencyRepos(2 marks)Q6. Which of the following correctly describes trade? (MCQ)Opportunity for investors to widen their investmentThe use of different types of securities in the monetary market for investors to measure out their fortuneThe process of buying a security from one market and interchange off to another market to obtain profitAn investment to inhibit the risk of unfavorable price movements (2 marks)Q7. The following statements relate to key roles of a financial intermediary. Match the appropriate options with their definitions. (P&D)The pocket billiardsing of many small prepares to make the large betterment of finance Reduction in default risk by bestow finance to multiple businessesFINANCIAL INTERMEDIATION AGGREGATION MATURITY mutation RISK REDUCTION(2 marks)Q8. Which of the following investment is most risky? (MCQ)Ordinary sharesP reference sharesMarket risk impounds club complete bonds(2 marks)Q9. Select the appropriate option in relation to money markets. (HA)It is a market for short-term funds original FALSEThis market is operated by financial institutions consecutive FALSEThe interest-bearing instrument is an example of money market instrument TRUE FALSEMoney market deposits is an example of money market derivatives TRUE FALSE(2 marks)FINANCIAL MARKETS, MONEY MARKETS, AND INSTITUTIONS (ANSWERS)Q1. All options are examples of financial intermediaryVenture Capitalist (An investing lodge in small companies)Insurance institutions (Charging premiums which are invested to provide returns) Credit unions (A member of the union may borrow from a pool of deposits at low interest) Commercial BanksQ2. BAll others are capital market instruments. Capital markets are long-term financial instruments in form of debt or equity which are traded.Q3. CMoney markets (A market that supports short-term debt financing & inv estment)Derivatives market (A market that provides instruments for managing financial risk) Commodity markets (A market that supports trading of raw or natural materials)Insurance markets (A market that facilitates buying & sell of insurance)Q4. DSecondary markets relate to the trading of securities at initial offering (Incorrect, trading of old(a) securities)Primary & Secondary markets deals in the sale of securities (Correct, but a similarity between both markets) The primary market is used by newly public limited entities (Correct, for primary market only)Primary markets deal initial offerings & Secondary markets deals in existing investments (Correct, difference between both markets)Q5. BFutures (A buying & exchange of a specified asset at a fixed rate in future) Euro currency (A currency which is held by people outside the country of termination of that currency)Repos (An agreement between two parties to buy or sell a financial instrument on an agreed date & price)Q6. COppo rtunity for investors to widen their investment (Diversification)The use of different types of securities in the financial market for investors to assess their risk (Risk-shifting)The process of buying a security from one market and selling off to another market to obtain profit (Arbitrage)An investment to reduce the risk of unfavorable price movements (Hedging)Q7.The pooling of many small deposits to make the larger advancement of finance AGGREGATIONReduction in default risk by lend finance to multiple businesses RISK REDUCTIONFinancial Intermediation The process of bringing unneurotic of borrower & lender is financial intermediationMaturity Transformation Borrowers wish to obtain long-term finance & Lender is unwilling to lock its finances. This technique develops a floating pool of deposits which satisfies both needs.Q8. AOrdinary shares, most risky as paid at finally aft(prenominal) all liabilities are cleared offPreference shares, riskier than bonds as paid after debts are clearedMarket risk bonds, also known as government bond as these provide returns on the current market basis Company issue bonds, risky due to the chance of company defaults but are usually backed up by company assetsQ9. It is a market for short-term funds TRUE This market is operated by financial institutions TRUE The interest-bearing instrument is an example of money market instrument TRUE Money market deposits is an example of money market derivatives FALSEMoney market deposit is an example of the interest-bearing instrument rather than money market derivatives. Money market deposit provides high interest on deposited savings.