4.4: The financial sector Flashcards

what even is a bond

1
Q

5 Role of financial markets

A

-Facilitate Saving —> To provide an opportunity for individuals and firms to save money
-Facilitate Lending —> To individuals and businesses and individuals who need more cash
-Facilitate Exchange
-To provide a market for equity —> To provide a market in which equity can be sold
-Provide Forward markets —>

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2
Q

What do Forward contracts do?

A

Fix the price and date of a future transaction, now so that you know exactly how much you will pay or receive and when.
This prevents both parties having to anxiously monitor the price, especially with price volatile commodities or currencies

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