Exam (elaborations)
AFM 121 MIDTERM QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
- Course
- Institution
AFM 121 MIDTERM QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
[Show more]
Seller
Follow
Content preview
AFM 121 MIDTERM QUESTIONS ANDANSWERS WITH SOLUTIONS 2024
What is the vital function of financial markets? - ANSWER Help facilitate transfer of capital
What are the three components of the wealth transfer process? - ANSWER 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? - ANSWER Capital is made up of governments, corporations and individuals
How is capital transferred? - ANSWER Direct investment (land, real estate)
Indirect investment (stocks, bonds, t-bills)
When will people transfer capital? - ANSWER When it is easy, cheap, and generates a good return
What does capital flow depend on? - ANSWER Political environment
Economic trends
Fiscal and Monetary policy
Investment opportunities
Labour force (highly educated / laws governing rights of labour force)
Who provides capital? - ANSWER Retail investors (individuals that buy retail)
Institutional Investors (pension funds and mutual funds)
Foreign investors (can include foreign retail, institutional and government investors)
, Who uses capital? - ANSWER 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? - ANSWER Debt
Equity
Investment Funds
Derivatives
Private equity
What makes a market efficient? - ANSWER Fast
Cheap
Liquid
What are primary markets? - ANSWER Securities are sold by issuers for the first time
Issuer receives money from this sale
What are secondary markets? - ANSWER Where securities previously issued are bought and sold
Funds do not go to issuer
How are regulations set for financial intermediaries? - ANSWER Regulations are meant to be structured
such that market efficiency is a by-product of this self interest
What are auction markets? - ANSWER Where all transaction converge in one location (TSX, TSX Venture
Exchange)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller PASSINGPOINT. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
72964 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now