* Resource: Financial Management: Principles and Applications * See Help File in the Main Forum for Chapter 15-12A Problem * Prepare responses to the following questions from Financial Management: Principles and Applications: *
14-1, 14-3, 14-4 (Ch. 14)
15-12A, 15-13A (Ch. 15)
* 14-1. What are financial markets?
* According to Investopedia, financial markets is a broad term that describes any marketplace where buyers and sellers trade assests. *
* What function do they perform?
* Financial markets have transparent prices, basic regulations for trading, costs and fees, and maket forces determine prices of securities that trade. *
* How would an economy be worse off without them?
* Financial markets play an important part in the macroenconomics like tax rates, production, and employment levels. Without these markets production would become stagnant, tax rates wouldn’t rise and fall, employment levels would stagnant. These important driving forces could drag a cuntry to a stand still and have long reaching effects in every industry from farming to production, logistics to housing. In today’s global economy- these markets keep the money flowing world wide.If they were missing there would be vast differences between developed countries, developing countries and third world countries and those differences would continue. Developed countries would continue to develop. Developing countries would stagnate. Third world countries would stay third world. *
* 14-3. Distinguish between the money and capital markets. *
* Capital market is the market for securities where government or companies go to raise long term funds. This is done usually by the company or government offers bonds and a person buys those bonds at a set price which allows the government or company to use the buyer’s money for a...