capital markets

Which of the following is an example of a market?

• garage sale

• New York Stock Exchange

• Grocery stores

• Online auctions

• All of the above

Which of the following best describes a stock?

• An IOU

• A share of ownership in a publicly traded company

• A certificate of indebtedness

• A document that allows a company to borrow from banks

• All of the above

Which of the following is not true of capital markets:

• They connect savers and borrowers.

• They connect buyers and sellers of financial assets.

• They provide financial capital to businesses and entrepreneurs.

• They provide governments a place to issue and sell stocks.

A bond is:

• a document that allows banks to issue stocks

• a share of ownership in a publicly traded company

• a certificate of indebtedness

• a certificate of deposit

• all of the above

How do savers benefit from capital markets?

• When savers purchase stocks and bonds, they benefit from higher liquidity in their investment portfolio.

• Savers benefit from the potential to earn additional income from the assets they purchase.

• Savers benefit because the financial assets they purchase in capital markets are risk free—that is the potential for loss is nearly zero.

• Savers benefit from regular and fixed returns on the assets they purchase.

How do businesses and governments benefit from capital markets?

• Companies and governments benefit because they have access to funds for projects without waiting until they have enough saved or in the case of government can collect enough through tax revenue.

• Capital markets provide easy access to cash for short-term use, such as payroll expenses or office supplies.

• Companies and governments pay taxes into the capital markets. These funds are available for consumers to borrow.

• Capital markets provide companies with risk-free access to money from government that can be used for expansion.

Which of the following correctly describes the relationship between risk of loss of principal and potential return for financial assets such as stocks and bonds?

• As the level of risk of loss of principal increases, the level of potential reward decreases.

• As the level of risk of loss of principal decreases, the level of potential reward increases.

• There is no relationship between the two.

• As the level of risk of loss of principal increases, the level of potential reward increases.

What are some types of information that is needed when buying or selling in the capital markets?

• cost of capital

• limitations of supply

• mergers & acquisitions

• performance

• all of the above

What were some of the aspects of the capital markets diagram in the video?

• long term

• economy

• financial markets

• investment, debt, equity

• all of the above