Financial Markets Quiz

What is the role of financial assets in facilitating saving?

• Transferring spending power from the present into the future

• Generating immediate income for individuals

• Increasing inflation in the economy

• Encouraging excessive spending habits

Who borrows money to finance the purchase of new equipment?

• Firms

• Governments

• Financial institutions

• Households

Which institutions play a vital role in creating payment systems for goods and services?

• Visa, Amex and Mastercard

• All of the above

• Retail banks

• Central banks

What do firms use forward markets for in commodities and currencies?

• To buy or sell forward

• To avoid paying taxes

• To speculate on future prices

• To manipulate market prices

What is the purpose of stock markets in providing a market for equities?

• To discourage buyers from purchasing new shares

• To create liquidity in the market

• To restrict the sale of shares

• To limit the number of shares issued

What is the main reason for a household to borrow money on a credit card?

• To invest in the stock market

• To finance the purchase of a new television

• To pay off existing debts

• To save for retirement

Which company offers credit card services to banks, retailers, and individuals?

• Retail banks

• Amex and Mastercard

• Visa

• Central banks

What do farmers use forward markets for in commodities?

• To avoid paying taxes

• To manipulate market prices

• To speculate on future prices

• To even out price fluctuations

What is the purpose of issuing shares or equity finance for companies?

• To reduce market liquidity

• To increase government spending

• To finance their expansion

• To discourage investors from buying new shares

What is the role of financial markets in making funds available to businesses and individuals?

• To increase market volatility

• To restrict government spending

• To discourage saving

• To facilitate borrowing money