AFM 121 EXAM ACTUAL QUESTIONS AND ANSWERS
WITH COMPLETE SOLUTIONS GRADED A++
what are the 3 components of wealth transfer process
1. financial instruments
2. financial markets
3. financial intermediaries
what is a financial instrument
what is bought and sold in a financial market
what is a financial market
a place that facilitates the buying and selling of financial instruments
what are financial intermediaries
people or companies that are involved with financial markets and instruments
what is capital
savings of
- individuals
- corporations
,- governments
how is capital utilized/transferred/invested
direct and indirect investments
what is an example of direct investment
assets that generate wealth (land, real estate, equipment)
what are some indirect investment
financial assets such as:
- stocks
- bonds
- tbills
T/F - individuals issue financial assets to receive funds
False, companies and governments issue these financial assets and receive funds
what is the relationship between investors and financial assets
investors buy financial assets to generate a return
T/F - Capital is mobile, scarce and sensitive
True capital is mobile scarce and sensitive
what does capital flow depend on
- political environment
- economic trends
- fiscal policy
- monetary policy
, - investment opportunities
- labour force
what are sources of capital
retail, institutional and foreign investors provide capital
retail investors - individuals like you and me
institutional investors
- pension funds
- mutual funds
foreign investors
- can include retail institutional and government investors
- investments made directly in Canadian firms or through stocks / bonds for Canadian
firms on foreign exchanges
T/F - individuals are users of capital
false, if needed they will go to a bank for a loan
who are users of capital
- companies / businesses
- governments
how do businesses obtain capital
WITH COMPLETE SOLUTIONS GRADED A++
what are the 3 components of wealth transfer process
1. financial instruments
2. financial markets
3. financial intermediaries
what is a financial instrument
what is bought and sold in a financial market
what is a financial market
a place that facilitates the buying and selling of financial instruments
what are financial intermediaries
people or companies that are involved with financial markets and instruments
what is capital
savings of
- individuals
- corporations
,- governments
how is capital utilized/transferred/invested
direct and indirect investments
what is an example of direct investment
assets that generate wealth (land, real estate, equipment)
what are some indirect investment
financial assets such as:
- stocks
- bonds
- tbills
T/F - individuals issue financial assets to receive funds
False, companies and governments issue these financial assets and receive funds
what is the relationship between investors and financial assets
investors buy financial assets to generate a return
T/F - Capital is mobile, scarce and sensitive
True capital is mobile scarce and sensitive
what does capital flow depend on
- political environment
- economic trends
- fiscal policy
- monetary policy
, - investment opportunities
- labour force
what are sources of capital
retail, institutional and foreign investors provide capital
retail investors - individuals like you and me
institutional investors
- pension funds
- mutual funds
foreign investors
- can include retail institutional and government investors
- investments made directly in Canadian firms or through stocks / bonds for Canadian
firms on foreign exchanges
T/F - individuals are users of capital
false, if needed they will go to a bank for a loan
who are users of capital
- companies / businesses
- governments
how do businesses obtain capital
