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Introduction To Financial Markets

The document is an activity worksheet for a course on financial markets. It contains 4 multiple choice questions that assess the student's understanding of key concepts about financial markets. The questions cover: [1] the definition of a financial market and its role in the economy; [2] the importance of financial markets for economic growth, raising capital, and job creation; [3] the main types of financial markets including the stock market, bond market, commodities market, and derivatives market; and [4] the positive effects of having knowledge of financial markets which includes being able to make effective financial decisions and manage money successfully.

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86 views2 pages

Introduction To Financial Markets

The document is an activity worksheet for a course on financial markets. It contains 4 multiple choice questions that assess the student's understanding of key concepts about financial markets. The questions cover: [1] the definition of a financial market and its role in the economy; [2] the importance of financial markets for economic growth, raising capital, and job creation; [3] the main types of financial markets including the stock market, bond market, commodities market, and derivatives market; and [4] the positive effects of having knowledge of financial markets which includes being able to make effective financial decisions and manage money successfully.

Uploaded by

Xytus
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CAED102: FINANCIAL MARKETS

ACTIVITY #1: INTRODUCTION TO FINANCIAL MARKETS

Name: __Xytus Anne B. Cortero__________ Section: __AC24_____

INSTRUCTIONS:
Answer the following questions and cite your corresponding source/s.

1. What is financial market? (2 pts)


Answer: Financial markets refer broadly to any marketplace where the trading of
securities occurs, including the stock market, bond market, forex market, and derivatives
market, among others. Financial markets are vital to the smooth operation of capitalist
economies.
Financial Market refers to a marketplace, where creation and trading of financial
assets, such as shares, debentures, bonds, derivatives, currencies, etc. take place. It plays
a crucial role in allocating limited resources in the country’s economy. It acts as an
intermediary between the savers and investors by mobilising funds between them.
Source/s: https://www.investopedia.com/terms/f/financial-market.asp
https://businessjargons.com/financial-market.html

2. What are the importance of financial markets? (5pts)


Answer: Financial markets are common to each country, and they play a major role in the
economic growth of the country. Some countries have small markets, while some have
big financial markets, like NASDAQ. Such markets act as an intermediary between
savers and investors, or they help savers to become investors. On the other hand, they
also help businesses to raise money to expand their business. It won’t be wrong to say
that investors and businesses access the financial markets to raise money and also to
make more money. Moreover, they also help in lowering unemployment as these markets
create massive job opportunities.
Source/s: https://efinancemanagement.com/financial-management/financial-markets-
functions-importance-and-types#:~:text=By%20Organizational
%20Structure-,Importance,help%20savers%20to%20become%20investors.

3. What are the different types or kinds of financial markets (include definition)? (5pts)
Answer:
1. Stock market - trades shares of ownership of public companies. Each share comes
with a price, and investors make money with the stocks when they perform well in the
market. It is easy to buy stocks. The real challenge is in choosing the right stocks that will
earn money for the investor.
2. Bond market - offers opportunities for companies and the government to secure
money to finance a project or investment. In a bond market, investors buy bonds from a
company, and the company returns the amount of the bonds within an agreed period, plus
interest.
3. Commodities market - traders and investors buy and sell natural resources or
commodities such as corn, oil, meat, and gold. A specific market is created for such
resources because their price is unpredictable.
4. Derivatives market - such a market involves derivatives or contracts whose value is
based on the market value of the asset being traded. The futures mentioned above in the
commodities market is an example of a derivative.
Source/s: https://corporatefinanceinstitute.com/resources/knowledge/trading-
investing/financial-markets/

4. As a student, what do you think will be the positive effects of having knowledge to
financial markets? (3 points)
Answer: Financial literacy is important because it equips us with the knowledge and
skills we need to manage money effectively. Without it, our financial decisions and the actions
we take or don’t take lack a solid foundation for success. The future success of our students
relies on providing opportunities for them to learn, develop, and strengthen core life skills they
need today and more importantly tomorrow as successful graduates.
Source/s: https://www.opploans.com/oppu/articles/why-is-financial-literacy-important/

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