List three different types of financial markets and discuss the type of financial instruments traded in the markets
What will be an ideal response?
Financial markets are the stock market, the bond market, and the loan market. The stock market is a market in which shares in the stocks of companies are traded. These shares give the stockholder partial ownership in the company and a claim on the company's profit. The bond market is a market in which bonds issued by companies and governments are traded. A bond is a promise to pay a specified sum of money on specified dates and is a debt for the issuer of the bond. The loan market is the market for loans from banks. Firms can borrow funds from banks. These loans are generally not traded.
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A company that retains a high bond rating during a recession in which many other companies see their bond ratings cut will experience
A) an increased flow of funds into the market for its securities. B) an increased demand for its securities, resulting in a higher expected return. C) a decreased demand for its securities, resulting in a lower expected return. D) a decreased flow of funds into the market for its securities.
If total explicit costs are equal to total implicit costs, then economic profit is zero
Indicate whether the statement is true or false