Asked by Sakina Pervez on Jul 08, 2024
Verified
Which of the following statements best describes financial markets?
A) If Disney issues additional shares of common stock through an investment banker, this would be a secondary market transaction.
B) The IPO market is a major part of the secondary market.
C) Only institutions, not individuals, can participate in derivatives market transactions.
D) Money market transactions involve debt securities with maturities of less than one year.
Money Market
A financial market for debt securities with maturities of less than 1 year (short term). The New York money market is the world’s largest.
Debt Securities
Financial instruments representing a loan made by an investor to a borrower, typically corporate or governmental.
Secondary Market
The financial market where investors buy and sell securities they already own, as opposed to the primary market where securities are first issued.
- Comprehend the principles of primary and secondary financial markets along with the function of financial intermediaries.
- Investigate the role of transactions in financial markets and their systematic classification.
Verified Answer
NM
NATHAN MBAYO MWAMBAJul 13, 2024
Final Answer :
D
Explanation :
Financial markets involve the buying and selling of financial assets such as stocks, bonds, and derivatives. Option A is incorrect as a secondary market involves the trading of existing securities, not the issuance of new ones. Option B is incorrect as the IPO market is part of the primary market, not the secondary market. Option C is incorrect as both institutions and individuals can participate in derivative market transactions. Option D is correct as money market transactions involve debt securities with maturities of less than one year.
Learning Objectives
- Comprehend the principles of primary and secondary financial markets along with the function of financial intermediaries.
- Investigate the role of transactions in financial markets and their systematic classification.