4.4.1

Question 1

What is the futures/ forwards market?

Answer 1

The ability to purchase commodities today for future production

Question 2

What is the money market?

Answer 2

The market for short-term borrowing(<12 months)

Question 3

What is the capital market?

Answer 3

The market for long-term borrowing(>12 month)

Question 4

What is a derivative?

Answer 4

A financial instrument based on the values of other financial instruments

Question 5

What is a sight deposit?

Answer 5

A deposit which can be withdrawn from the bank without notice or after a short notice (easy access savings account)

Question 5

What is narrow money(M1)?

Answer 5

M1 is the most liquid components of the money supply, Includes physical currency and checking deposits in banks.

Question 6

What is broad money?

Answer 6

Illiquid assets.

Question 7

Why is the banking system important?

Answer 7

Facilitates the market for loans
Allows for savings
facilitates exchange

Question 8

What are the types of financial markets?

Answer 8

Bond market
Stock market
Currency market
Mortgage market

Question 9

What are the roles of financial markets?

Answer 9

Saving, Borrowing, futures markets, Equities