THE ECONOMICS OF MONEY BANKING AND
FINANCIAL MARKETS FINAL PAPER 2026
PRACTICE TEST COMPLETE QUESTIONS
SOLUTIONS GRADED A+
◉ residual claimant.
Answer: the cooperation must pay all its debt holders before it pays
its equity holders.
◉ disadvantage of owning equities.
Answer: main disadvantage of owning a corporations equities rather
than its deb is that an equity holder is a residual claimant
◉ advantage of owning equities.
Answer: equity holders benefit directly from any increases in the
corporations profitability or asset value because equities confer
ownership rights on the equity holders
◉ primary market.
Answer: a financial market in which new issues of a security, such as
a bond or stock, are sold to initial buyers by the corporation or
government agency borrowing the funds
, ◉ secondary market.
Answer: a financial market in which securities that have been
previously issued can be resold
◉ investment bank.
Answer: firms that assist in the initial sale of securities in the
primary market
◉ underwriting.
Answer: guarantees a price for a corporations securities and then
sells them to the public
◉ brokers.
Answer: are agents of investors who match buyers with sellers of
securities
◉ dealers.
Answer: link buyers and sellers when buying and selling securities
at stated prices
◉ liquid.
Answer: easily converted to cash
FINANCIAL MARKETS FINAL PAPER 2026
PRACTICE TEST COMPLETE QUESTIONS
SOLUTIONS GRADED A+
◉ residual claimant.
Answer: the cooperation must pay all its debt holders before it pays
its equity holders.
◉ disadvantage of owning equities.
Answer: main disadvantage of owning a corporations equities rather
than its deb is that an equity holder is a residual claimant
◉ advantage of owning equities.
Answer: equity holders benefit directly from any increases in the
corporations profitability or asset value because equities confer
ownership rights on the equity holders
◉ primary market.
Answer: a financial market in which new issues of a security, such as
a bond or stock, are sold to initial buyers by the corporation or
government agency borrowing the funds
, ◉ secondary market.
Answer: a financial market in which securities that have been
previously issued can be resold
◉ investment bank.
Answer: firms that assist in the initial sale of securities in the
primary market
◉ underwriting.
Answer: guarantees a price for a corporations securities and then
sells them to the public
◉ brokers.
Answer: are agents of investors who match buyers with sellers of
securities
◉ dealers.
Answer: link buyers and sellers when buying and selling securities
at stated prices
◉ liquid.
Answer: easily converted to cash
