Question 1

a. Explain four (4) functions that are provided by financial intermediaries.

b. Distinguish between the following terms using appropriate examples:

i. primary markets and secondary markets

ii. capital markets and money markets

iii. organized exchanges and over-the-counter markets

c. Contrast the factors a firm may consider when deciding to issue equity as against debt

Question 2

a. Identify four (4) main participants of money markets and describe the role they each play in maintaining liquidity in the money market.

b. Money market securities are financial instruments that are widely traded on financial markets.

i. Outline five (4) major characteristics of money market instruments.

ii. Critically assess how any four (4) money market instrument is used to enhance liquidity in financial markets

Question 4

a. Explain the role of each of the following sets of individuals in the financial markets.

i. Underwriters

ii. Advisors

iii. Brokers

iv. Dealers

b. i What is market efficiency and how does a market become efficient?

ii. Summarize the degree of efficiency of a market.

c. Stock markets are constantly changing. Much of this change is due to speculation, when stocks are traded back and forth between investors. Explain the role that speculation plays in the stock market.