Which of the Following Best Describes the Functions of the Capital

question 40

Multiple Choice

Which of the following best describes the functions of the capital market?

• A)Accepts funds from the public and invests them in assets.
• B)A market where securities may be traded without incurring capital gains tax.
• C)Enables the suppliers of funds and the users of funds to negotiate the conditions on which the funds will be transferred.
• D)A market in which trading takes place by competitive bidding on an organised exchange.

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Definitions:

Equilibrium

A situation in which the market price has reached the level at which quantity supplied equals quantity demanded.

Money Demanded

The total amount of money that households and businesses want to hold at a given time, often influenced by interest rates, income levels, and the economic outlook.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulation of banks, and ensuring stability of the financial system.

Federal Funds Rate

The rate at which banks exchange federal funds (balances maintained at Federal Reserve Banks) among themselves for overnight loans.