Wk 3 Financial Markets & Institutions Flashcards
1
Q
What are the Key Economic Entities in an Economy:
A
- Surplus Spending Units: Savers
- Deficit Spending Units: Borrowers
- Financial intermediaries
- Brokers/ dealers
2
Q
What are the two main functions of Financial Intermediation?
A
- Asset Transformation
- Economies of Scale
3
Q
What are the different types of markets within an economy?
A
- Money/ capital market
- FOREX Market
- Derivative Market
- Primary and secondary Market
- Spot and Forward markets
- Retail and wholsesale markets
4
Q
What is a Money Market?
A
- Money is the commodity traded and sold
- Interest Rate acts as the price
- Short term lending/ borrowing
- Instruments include treasury bills, repo, commercial papers
5
Q
What are Capital Markets?
A
- Provides finance to companies
- Mobilises savings from idle agents to productive agents
- Two main types are the stock and bond markets
6
Q
What is the Foreign Exchange market?
A
- Currencies traded for eachother
- Both ‘spot’ and ‘forwards’ markets
- Important for firms dealing in more than one currency
7
Q
What is the derivative market?
A
- Markets dealing in derivatives e.g. futures, forwards, options, swaps etc.
- Both exchange traded and OTC
8
Q
A
