4- The financial sector

Question 1

What are financial markets

Answer 1

Where buyers and sellers can buy and trade a range of services or assets that are fundamentally monetary in nature

Question 2

what are the two reasons for the existence of financial markets

Answer 2

Meet demand for services such as saving and borrowing
To allow for speculation and financial gains

Question 3

roles of the financial market

Answer 3

-provide a market for company shares
-provide forward markets
-Facilitate the exchange of goods and services
-lend to businesses and individuals
-facilitate savings

Question 4

Causes of market failure pin the financial market

Answer 4

-asymmetric equations
-moral hazard by making decisions in their own best interest
-externalities
-market rigging

Question 5

best example of market rigging

Answer 5

insider trading

Question 6

role of the central banks

Answer 6

-control monetary policy
-the government bank
-regulate the financial system
-bank to other banks