D. Role And Function Of The Main Financial Institutions And Markets That Facilitate Financing

Question 1

is applied to high quality, short-term debt instruments that mature within one year.

Answer 1

Money Market

Question 2

is a way to accrue value over time with longer-term assets with maturation periods beyond one year.

Answer 2

Capital Market

Question 3

Types of Investors in Money Market

Answer 3

Risk-averse Investor
Short-term Investor

Question 4

Types of Investor in Capital Market

Answer 4

Risk-tolerant Investor
Long-term Investor

Question 5

worries about losing money. This investor will feel more comfortable using the money market because they will preserve the money they have, even if they will only generate a modest return on their investment.

Answer 5

Risk-averse Investor

Question 6

needs money in the near term-within a year. This refers to the money soon, your number-one priority is preserving it- preferring the security of the money market.

Answer 6

Short-term Investor

Question 7

understands that risk is the price you pay for the potential of a big reward and seeks the potential for greater
profit offered by the capital market.

Answer 7

Risk-tolerant Investor

Question 8

has a long time horizon, so they can invest in the capital market. If stocks fall, these long-term investors will
generally be able to recoup losses over time.

Answer 8

Long-term Investor

Question 9

argues that current stock prices reflect all existing available information, making them fairly valued as they are presently.

Investors who strongly believe in it choose passive investment strategies that mirror benchmark performance,
but they may do so to varying degrees.

Answer 9

Efficient Market Hypothesis

Question 10

The Three Variations of the Efficient Market Hypothesis

Answer 10

The Weak-Form
The Semi-Strong Form
The Strong Form

Question 11

assume that prices might not reflect new information that hasn’t yet been made available to the public.

Answer 11

Weak Form of Efficient Market Hypothesis

Question 12

This form takes the same assertions of weak form, and includes the assumption that all new public information is instantly priced into the market. In this way, neither fundamental nor technical analysis can be used to generate excess returns.

Answer 12

Semi-Strong Form of Efficient Market Hypothesis

Question 13

Its followers believe that all information, both public and private, is incorporated into a security’s current price. In this way, not even insider information.can give investors an opportunity for excess returns.

Answer 13

Strong Form of Efficient Market Hypothesis