Theme 4:4.4.1:Role of the financial markets

Question 1

wnat is a financial market

Answer 1

where buyers and sellers can buy and trade services/assets that are fundamentally monetary in nature

Question 2

roles of the financial market

Answer 2

to facilitate saving

lend to businesses and individuals to facilitate the exchange of goods and services

to promote forward markets in currencies and commodities

to provide a market for equities

Question 3

facilitate saving

Answer 3

allows transfer of spending power from the present to the future e.g. savings accounts and stocks

Question 4

lend to businesses and individuals

Answer 4

allows consumption and investment

Question 5

lend to businesses and individuals

Answer 5

allows consumption and investment

Question 6

facilitate the exchange of goods and services

Answer 6

by creating a payment system and the central banks print money

Question 7

forward markets in currencies and commodities

Answer 7

able to buy in the future at a set price to provide stability

Question 8

market for equities

Answer 8

issuing shares to be sold on in the future