Which financial regulator is responsible for bank supervision in the Australian financial system?

APRA - Australian Prudential Regulation Authority

What is the main role of ASIC?

Regulator of investment, superannuation & insurance industry

What is a financial intermediary?

An organisation that accepts deposits and lends to others

The secondary market is where...

Existing financial securities are traded

Which of the following is a DISadvantage of global financial markets for Australia?

Disturbances in overseas markets can have a big influence in Australia

What is the RBA’s monetary policy target?

An inflation rate between 2-3%.

How would a decrease in economic growth affect the money market?

D curve shifts left and interest rates fall

What is the difference between primary financial markets and secondary financial markets?

Primary markets create financial assets; secondary markets trade them

Which of the following best explains volatility in share prices in the Australian share market?

Many share purchases are speculative.

Which of the following best describes an advantage of debt financing over equity financing?

Existing owners maintain control over the company.

Which of the following is a characteristic of a share?

It limits the responsibility of its holder to pay back the company's debts

An investor buys a share. The share price increases and the investor sells the share. This is described as ...

The investor has made a capital gain.

Which of the following is most likely to decrease spending in the economy?

Decrease in the money supply & increase in interest rates.

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11 Economics Financial Markets

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Answers

1
Which financial regulator is responsible for bank supervision in the Australian financial system?
ACCC - The Australian Competition and Consumer Commission
RBA - Reserve Bank of Australia
APRA - Australian Prudential Regulation Authority
ASIC - Australian Securities and Investments Commission
2
A an example of a derivative product is
A bank-accepted bill
A share future
A long term government bond
An overdraft loan
3
What is the main role of ASIC?
To determine the level of interest rates in the Aus economy.
To facilitate the buying and selling of equities.
Regulator of investment, superannuation & insurance industry
To facilitate the buying & selling of currencies
4
What is a financial intermediary?
A substitute for currency.
A security that is traded in the futures exchange.
An organisation that accepts deposits and lends to others
An organisation that regulates financial organisations.
5
The secondary market is where...
New financial securities are issued
Only debt securities are traded
Existing financial securities are traded
Only equity securities are traded
6
Which of the following is a DISadvantage of global financial markets for Australia?
Australians have greater access to foreign capital for investment
Australian savers can invest more money overseas
Competition in Australian financial marekts increases
Disturbances in overseas markets can have a big influence in Australia
7
In which of the following markets are Commonwealth Government securities sold?
Consumer credit market
Bond market
Foreign exchange market
Share market
8
What is the RBA’s monetary policy target?
An inflation rate between 2-3%.
A cash rate below 2%.
An economic growth rate in excess of 5%
An unemployment rate of less than 2%.
9
How would a decrease in economic growth affect the money market?
D curve shifts right and interest rates rise
D curve shifts right and interest rates fall
D curve shifts left and interest rates rise
D curve shifts left and interest rates fall
10
What is the difference between primary financial markets and secondary financial markets?
Primary markets create financial assets; secondary markets trade them
Primary markets trade financial assets; secondary markets create them
Primary markets are in a physical location; secondary markets are online
Primary markets involve investor trades; secondary involve company trades
11
Which of the following best explains volatility in share prices in the Australian share market?
Many share purchases are speculative.
Most investors have little confidence in the Australian economy.
Most Australian companies are highly unstable.
Companies listed on the ASX are better suited to debt financing
12
1. Which interest rate is directly determined by the Reserve Bank?
Housing loan interest rates.
Bank deposit rates
Bank lending rates
The cash rate.
13
Which of the following best describes an advantage of debt financing over equity financing?
Existing owners maintain control over the company.
Debt financing is subject to less speculation than equity financing.
Debt financing is not subject to market regulations.
The existing owners of the company get the same returns
14
Which of the following is a characteristic of a share?
It can always be traded on the Australian Securities Exchange (ASX).
The owner of the share receives regular interest repayments
It allows the holder to participate in the daily management of the company
It limits the responsibility of its holder to pay back the company's debts
15
Which of the following entities can borrow money by issuing a bond?
Household
Government
Small unicnorporated company
Sole trader
16
When did the GFC occur?
2011-2
2003-4
2007-8
1996-7
17
An investor buys a share. The share price increases and the investor sells the share. This is described as ...
The investor has made a capital gain.
The investor has made a capital loss.
The investor has received a dividend.
The investor has positively geared the investment.
18
What is the elasticity of the money supply?
It is perfectly elastic.
It is fairly elastic
It is perfectly inelastic.
It is unitary elastic
19
Which of the following is most likely to decrease spending in the economy?
Decrease in the money supply & increase in interest rates.
Decrease in the money supply & decrease in interest rates.
Increase in the money supply & decrease in interest rates.
Increase in the money supply & increase in interest rates.
20
Which of the following financial products is likely to have the highest interest rate?
Short-term money market loan
Unsecured loan to a business
Bond issued by BHP
Housing loan

11 Economics Financial Markets Flashcards | StudBud