Morden Finiancial Systems

Finance

Caitlyn Thomas

3689908

Week 3: A Morden Financial System

1. True

Money is a commodity that is universally accepted as a medium of exchange. It also has characteristics of drivability, can be divided among parties and a store value that is a measure of worth

2. True

A Morden financial system involves the trading of financial instruments by financial institutions within financial markets

3. False

Time-pattern of cash flows is the frequency of periodic cash flows (interest and principal) associated with a financial instrument. Hence has no connection to maturity of the instrument

4. True

A well functioning system will allocated funds to the most efficient users

5. False

Risk- the probability that an actual outcome will vary from the expected outcome.

6. True

Monetary policy- central banks actions to influence the level of interest rates in order to achieve certain economic objectives.

7. False

Investment banks- specialist provision of financial and advisory services to corporations, high net worth individuals and governments

Depository Financial Institutions- gather deposits and provide loans to customers

8. False

Contractual savings institutions issue contracts that set out periodic payments of a specified event occurs

Contractual savings institutions is just one category that financial companies can fall into

9. False

The matching principle contends that short term assets should be funded with short term liabilities and long term assets should be funded with longer term liabilities and equity.

10. False

Equity represents partial ownership in a company as represented by the issue of shares.

1. “A highly developed financial system is essential to ongoing economic growth and prosperity”

Discuss the component parts that form a financial system and the relevance of the above statement

A Morden financial system facilitates a flow of funds through and across economies. The...