fin 504 topic 1 dq 2

How does a cost-efficient capital market help reduce the prices of goods and services? Describe the different ways in which capital can be transferred from suppliers of capital to those who are demanding capital. Is an initial public offering an example of a primary or a secondary market transaction? Indicate whether the following instruments are examples of money market or capital market securities. a. US Treasury bills b. Long-term corporate bonds c. Common stocks d. Preferred stocks e. Dealer commercial paper Briefly explain what is meant by the term efficiency continuum.

1) What id the essential purpose for financial markets? 2) Which is more important, the primary market for stocks of the secondary market? Why? 3) How does a ponzi scheme work? 4) Discuss some of the forces that help make markets efficient? 5) What are institutional investors? Why are they needed in our economy? 6) What are some of the differences between a forward contract and a future contract?

a. “Financial intermediaries play a crucial role in an economic crisis–they are responsible for both causing the market to crash and then helping it recover from the crisis.” Is this statement true? Discuss with an example.b. What are the risks and rewards of investing in the stock market as compared to the bond market?

Why is it so important for an economy to have fully developed financial Markets? I 2. Distinguish between direct financing and indirect financing. 3. Describe how over-the-counter markets work.

What is market efficiency? How do we characterise efficiency in financial markets? Briefly explain each type of efficiency and describe any empirical evidence that supports it.

what role primary financial markets play in the current economy? What role do secondary markets fill?

Explain the following concepts in relation to the role that banks play in financial markets: i) Loan size transformation ii) Maturity transformation iii) Risk transformation

How do financial intermediaries help small investors access the market?