Financial Markets Q and A

I. I. Answer the following questions: 

1. Why Study Financial Markets and Institutions?

2. What is meant by Financial Markets?

3. Differentiate between Primary Market and Secondary Market.

4. Differentiate between money and capital markets.

5. What is meant by Foreign Exchange Markets?

6. What is meant by Derivative Security Market?

7. What are the risks faced by financial institutions?

8. Explain the Dodd-Frank Act.

9. Explain the Impact of Globalization of Financial Markets and Institutions.

II. Multiple Choices questions

1. The market where a company raises capital for the first time is known as the_____________ market.

2. ______________is an agreement between two parties who want to protect themselves against future movements in interest rates.

3. It is the place where individuals and institutions come together and announce the buy and sell prices.

4. ____________ is a contract between two parties to buy or sell an asset at a specified future time at a price agreed on at the time of conclusion of the contract, making it a type of derivative instrument.

5. The ______________ market does not require the parties to gather in a central location.

6. An ____________ contract is an agreement between a buyer and seller that gives the purchaser of the option the right to buy or sell a particular asset at a later date at an agreed upon price.

7. The market where a company raises capital for the first time is known as the____________ market.

8. ______________is an agreement between two parties who want to protect themselves against future movements in interest rates.

9. It is the place where individuals and institutions come together and announce the buy and sell prices.

10. ____________ is a contract between two parties to buy or sell an asset at a specified future time at a price agreed on at the time of conclusion of the contract, making it a type of derivative instrument.

11. The ______________ market does not require the parties to gather in a central location.

12. An ____________ contract is an agreement between a buyer and seller that gives the purchaser of the option the right to buy or sell a particular asset at a later date at an agreed upon price.

III. True / false

1. SWAPS and forwards are the examples of OTC derivative. 

2. Institutions through which suppliers channel money to users of funds is known as Exchange houses. 

3. Unlike the dealer market, the auction market does not require the parties to gather in a central location. 

4. Financial institutions are heavily regulated to protect society at large from market failures. 

5. Insurance companies, pension funds are non-depository institutions. 

6. Money market is typically the marketplace where short-term lenders and borrowers meet and fulfil their fund and interest requirements.