AFM 121 FINAL EXAM NEWEST 2024 ACTUAL EXAM 200 QUESTIONS AND CORRECT DETAILED ANSWERS
What is a market? - (answer) - has buyers and sellers
- we exchange capital in a capital market
- capital goes from those who have it to those who require it
- this exchange is done because those that have extra wealth can provide capital and get a return
3 components of the transfer of capital - (answer) financial markets, financial instruments,
intermediaries
What is capital? - (answer) human capital:
- people in the labour force
financial/investment capital:
- savings of people, corporations, and governments
direct investment - (answer) investing in things like land, real estate, or equipment
indirect investment - (answer) invest in financial stocks, bonds, or treasury bills
we want capital to be... (capital efficiency entails 3 things) - (answer) - mobile
- scarce
- sensitive
if i have capital to invest, i am only going to do so if it is... - (answer) - easy
- cheap
- generates a good return
institutional investors - (answer) pension funds (ontario teachers, Canada Pension PLan Invest Board),
mutual funds (Trimark, AGF)
, AFM 121 FINAL EXAM NEWEST 2024 ACTUAL EXAM 200 QUESTIONS AND CORRECT DETAILED ANSWERS
retail investors - (answer) individuals like us (citizens)
foreign investors - (answer) - can include foreign retail, institutional and government investors
- investments are made directly in Canadian firms or through stocks/bonds for Canadian firms listed on
foreign exchanges
financial instruments - (answer) the mechanisms by which capital is transferred
debt - (answer) - funds that are borrowed
- these funds are paid back at a specific date (the maturity date)
- interest is paid between the borrowing and maturity date
equity - (answer) - typically in the form of stacks/shares in a company (ownership)
- you own part of the company when you are an equity investor
- have voting privileges and may receive regular dividend payments
investment funds - (answer) - buys and sells stocks/bonds (typically through a mutual fund)
derivatives - (answer) - these products derive their value from another asset (stock, bond, currency)
- is often used for hedging
private equity - (answer) - invest in both debt and equity
- investments are typically made directly in companies rather than purchasing stocks or bonds
- funds are provided by pension funds, endowments, or wealthy individuals
financial markets - (answer) - where buyers and sellers of financial instruments come together
- we want financial markets to be fast, cheap, and liquid (many buyers)
primary markets - (answer) - when the company sells equity to investors
What is a market? - (answer) - has buyers and sellers
- we exchange capital in a capital market
- capital goes from those who have it to those who require it
- this exchange is done because those that have extra wealth can provide capital and get a return
3 components of the transfer of capital - (answer) financial markets, financial instruments,
intermediaries
What is capital? - (answer) human capital:
- people in the labour force
financial/investment capital:
- savings of people, corporations, and governments
direct investment - (answer) investing in things like land, real estate, or equipment
indirect investment - (answer) invest in financial stocks, bonds, or treasury bills
we want capital to be... (capital efficiency entails 3 things) - (answer) - mobile
- scarce
- sensitive
if i have capital to invest, i am only going to do so if it is... - (answer) - easy
- cheap
- generates a good return
institutional investors - (answer) pension funds (ontario teachers, Canada Pension PLan Invest Board),
mutual funds (Trimark, AGF)
, AFM 121 FINAL EXAM NEWEST 2024 ACTUAL EXAM 200 QUESTIONS AND CORRECT DETAILED ANSWERS
retail investors - (answer) individuals like us (citizens)
foreign investors - (answer) - can include foreign retail, institutional and government investors
- investments are made directly in Canadian firms or through stocks/bonds for Canadian firms listed on
foreign exchanges
financial instruments - (answer) the mechanisms by which capital is transferred
debt - (answer) - funds that are borrowed
- these funds are paid back at a specific date (the maturity date)
- interest is paid between the borrowing and maturity date
equity - (answer) - typically in the form of stacks/shares in a company (ownership)
- you own part of the company when you are an equity investor
- have voting privileges and may receive regular dividend payments
investment funds - (answer) - buys and sells stocks/bonds (typically through a mutual fund)
derivatives - (answer) - these products derive their value from another asset (stock, bond, currency)
- is often used for hedging
private equity - (answer) - invest in both debt and equity
- investments are typically made directly in companies rather than purchasing stocks or bonds
- funds are provided by pension funds, endowments, or wealthy individuals
financial markets - (answer) - where buyers and sellers of financial instruments come together
- we want financial markets to be fast, cheap, and liquid (many buyers)
primary markets - (answer) - when the company sells equity to investors
