Which of the following statements best describes financial markets?
A) Capital market instruments include both long-term debt and common stocks.
B) Banker's acceptance has no default risk.
C) Foreign banks are more restricted from operating in Canada.
D) The original maturity of a commercial loan can go up to ten years.

Question

Quizplus · Accepted Answer

Financial markets refer to the marketplace where financial instruments are traded, including stocks, bonds, currencies, and commodities. The capital market is a subset of the financial market, and it deals with long-term debt and equity instruments. Therefore, Option A accurately describes financial markets.

Option B is incorrect because banker's acceptance does have default risk. Although they are considered safe investment options, there is always the chance that the bank may default on the payment.

Option C is incorrect because foreign banks are not necessarily more restricted from operating in Canada. There are regulations and requirements that foreign banks must adhere to when operating in Canada, but they are not necessarily more restricted than domestic banks.

Option D is incorrect because commercial loans generally have shorter maturities than ten years. Commercial loans are usually short-term loans with maturities ranging from three months to three years.

Which of the Following Statements Best Describes Financial Markets