AFM 121 Final Exam Questions & Answers 2023/2024
What is a market? - ANSWER-- has buyers and sellers
- we exchange capital in a capital market
- capital goes from those who have it to those who require it
- this exchange is done because those that have extra wealth can provide capital an...
retail investors - ANSWER-individuals like us (citizens)
foreign investors - ANSWER-- can include foreign retail, institutional and government investors
- investments are made directly in Canadian firms or through stocks/bonds for Canadian firms listed on
foreign exchanges
financial instruments - ANSWER-the mechanisms by which capital is transferred
debt - ANSWER-- funds that are borrowed
- these funds are paid back at a specific date (the maturity date)
- interest is paid between the borrowing and maturity date
equity - ANSWER-- typically in the form of stacks/shares in a company (ownership)
- you own part of the company when you are an equity investor
- have voting privileges and may receive regular dividend payments
investment funds - ANSWER-- buys and sells stocks/bonds (typically through a mutual fund)
derivatives - ANSWER-- these products derive their value from another asset (stock, bond, currency)
- is often used for hedging
private equity - ANSWER-- invest in both debt and equity
- investments are typically made directly in companies rather than purchasing stocks or bonds
- funds are provided by pension funds, endowments, or wealthy individuals
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