Chapter 1 (Part 1)

Question 1

What are the three central elements of the securities industry?

Answer 1

Investment markets, products and intermediaries.

Question 2

What is capital?

Answer 2

Capital is wealth such as land and buildings or money, stocks and bonds.

Question 3

What is the definition of direct and indirect investment.

Answer 3

Direct investment- using capital to directly buy a house, build a highway or start a company.

Indirect investment- when a company sells stocks or bonds and in turn uses funds for direct investment into manufacturing and supplies. Or by investing savings with a financial institution.

Question 4

What are the 3 main characteristics of capital?

Answer 4

It’s mobile, scarce and sensitive to its environment.

Question 5

What are the 5 risks to evaluate before investing in a country?

Answer 5

Political environment- risk of conflict

Economic trends

Fiscal policy - tax and savings/investment policy

Monetary policy- money supply

Opportunities for investment

Characteristics of labour force