Role of financial markets

Question 1

Functions of Financial Markets

Answer 1

• facilitate savings
• facilitate exchange of goods and services
• Loans to businesses and individuals
• provide forward markets for currencies and commodities
• Market for equities

Question 2

Equities

Answer 2

Stocks and Shares

Question 3

How does the financial market facilitate savings

Answer 3

storing money in savings accounts or owning stocks and shares

Question 4

Difference between stocks and shares

Answer 4

stocks is the owners part ownership in multiple companies but shares is the ownership in a single company

Question 5

How does the financial market give out loans

Answer 5

gives out money to individuals and businesses to be paid back over time, done to increase investment and consumption

Question 6

How does the financial market facilitate exchange of goods and services

Answer 6

Creates a payment system in paper money, cheques, credit cards

Question 7

How does the financial market provide a forward market

Answer 7

Prices can be agreed at an earlier date than delivery to ensure price stability, common in volatile markets like commodities

Question 8

How does the financial market provide an equity market

Answer 8

Make shares be able to be sold in the future making them an appealing asset, buying of shares is important for companies growth

Question 9

Is the financial market micro or macro

Answer 9

micro as it is an individual market but has huge implications on the macro economy