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Author Question: List three different types of financial markets and discuss the type of financial instruments traded ... (Read 156 times)

ts19998

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on: Jun 29, 2018
List three different types of financial markets and discuss the type of financial instruments traded in the markets.
 
  What will be an ideal response?

Question 2

Explain the statement There is no such thing as a free lunch.
 
  What will be an ideal response?


Anonymous

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Reply #1 on: Jun 29, 2018
Answer to Question 1

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.

Answer to Question 2

The statement means that even if there is no overtly explicit cost attached to an activity, there is always an implicit cost, or opportunity cost, involved with every transaction. All goods and services must be paid for by someone, so you do not get something for nothing.


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