Financial Markets

question 1

Multiple Choice

Financial markets

• A) channel funds indirectly between borrowers and lenders.
• B) channel funds directly from lenders to borrowers.
• C) act as go-betweens by holding a portfolio of assets and issuing claims based on that portfolio to savers.
• D) generally provide lenders with lower returns than do financial intermediaries.

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Definitions:

Business Firm

A Business Firm is an organization engaged in commercial, industrial, or professional activities with the aim of generating profits.

Drawing Account

An account used to record withdrawals made by a company’s owner for personal use, which is then deducted from the company’s capital.

Owner's Capital Account

Represents the total equity or net worth of an individual owner in a company, detailing the contributions, earnings, and withdrawals of the owner.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, leading to the net income or loss for the period.