Which of the following statements best describes financial markets?
A) Capital market transactions involve only the purchase and sale of equity securities, i.e., common stocks.
B) If an investor sells shares of stock through a broker, then this would be an indirect finance transaction.
C) Money market mutual funds have high degree of default risk.
D) Commercial papers have maturities longer than one year.

Question

Quizplus · Accepted Answer

Financial markets refer to markets where financial securities, such as stocks, bonds, and currencies, are traded. Capital market transactions can involve both equity and debt securities. Indirect finance transactions involve using financial intermediaries, such as a broker, to obtain funding rather than directly borrowing from investors. Money market mutual funds are considered low-risk investments. Commercial papers typically have maturities of less than one year. Therefore, option B is the best choice as it accurately describes financial markets.

Which of the Following Statements Best Describes Financial Markets