Financial markets across economies involve various kinds of participants and trade various types of assets and securities. It is important to understand the kinds of markets in which financial transactions take place. You are preparing to take an exam in your finance class, and you’ve been making flash cards on different markets and transactions. Indicate the markets in which each of the following transactions will be traded: Description of Transaction Type of Market Helen buys 1,000 shares of Microsoft stock through her online brokerage account. Finacial Assets or physical markets Description of Transaction Type of Market A farmer agrees to sell 10,000 bushels of wheat at the rate of $4.50 per bushel to a buyer in three months. A regulated exchange, such as the Chicago Board of Trade, completes the transaction. Futures or spot markets Description of Transaction Type of Market Sheila saves $10,000 and buys a certificate of deposit (CD) that will mature in six months. money or capital markets Description of Transaction Type of Market Google filed its initial public offering worth $2.7 billion in 2004. Source: CNNmoney.com, Apr. 30, 2004. Secondary or primary markets A corn processor in Nebraska has decided to purchase a futures contract for corn. The contract will increase in value if the price of corn rises, thereby offsetting the processors’ increased costs/decreased net income. In this example, the corn processor is (hedging or speculating)
Financial markets across economies involve various kinds of participants and trade various types of assets and securities. It is important to understand the kinds of markets in which financial transactions take place. You are preparing to take an exam in your finance class, and you’ve been making flash cards on different markets and transactions. Indicate the markets in which each of the following transactions will be traded: Description of Transaction Type of Market Helen buys 1,000 shares of Microsoft stock through her online brokerage account. Finacial Assets or physical markets Description of Transaction Type of Market A farmer agrees to sell 10,000 bushels of wheat at the rate of $4.50 per bushel to a buyer in three months. A regulated exchange, such as the Chicago Board of Trade, completes the transaction. Futures or spot markets Description of Transaction Type of Market Sheila saves $10,000 and buys a certificate of deposit (CD) that will mature in six months. money or capital markets Description of Transaction Type of Market Google filed its initial public offering worth $2.7 billion in 2004. Source: CNNmoney.com, Apr. 30, 2004. Secondary or primary markets A corn processor in Nebraska has decided to purchase a futures contract for corn. The contract will increase in value if the price of corn rises, thereby offsetting the processors’ increased costs/decreased net income. In this example, the corn processor is (hedging or speculating)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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2. Types of financial markets
Financial markets across economies involve various kinds of participants and trade various types of assets and securities. It is important to understand the kinds of markets in which financial transactions take place.
You are preparing to take an exam in your finance class, and you’ve been making flash cards on different markets and transactions. Indicate the markets in which each of the following transactions will be traded:
|
Description of Transaction
|
Type of Market
|
|---|---|
| Helen buys 1,000 shares of Microsoft stock through her online brokerage account. | Finacial Assets or physical markets |
|
Description of Transaction
|
Type of Market
|
|---|---|
| A farmer agrees to sell 10,000 bushels of wheat at the rate of $4.50 per bushel to a buyer in three months. A regulated exchange, such as the Chicago Board of Trade, completes the transaction. | Futures or spot markets |
|
Description of Transaction
|
Type of Market
|
|---|---|
| Sheila saves $10,000 and buys a certificate of deposit (CD) that will mature in six months. | money or capital markets |
|
Description of Transaction
|
Type of Market
|
|---|---|
|
Google filed its initial public offering worth $2.7 billion in 2004.
Source: CNNmoney.com, Apr. 30, 2004.
|
Secondary or primary markets |
A corn processor in Nebraska has decided to purchase a futures contract for corn. The contract will increase in value if the price of corn rises, thereby offsetting the processors’ increased costs/decreased net income. In this example, the corn processor is (hedging or speculating)
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