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CFA Level 1 Reading 46 Questions and Answers Fully Solved
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CFA Level 1 Reading 46
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CFA Level 1 Reading 46financial system - answer this includes markets and various financial intermediaries that
help transfer financial assets, real assets, and financial risks in various forms from one
entity to another, from one place to another, and from one point in time to another
__ - answer of the financial system include: saving, borrowing, raising equity capital,
managing risk, exchanging assets in spot markets, and information-motivated trading
interest rate - answer the price of using money; the return that lenders, the savers,
expect to receive from borrowers for allowing borrowers the use the savers' money
primary - answer__ markets; the market where securities are first sold and the issuers
receive the proceeds
productive - answer economies are said to be allocation ally efficient when their
financial systems allocate capital to those uses that are most __
securities - answer these are the most actively traded assets; include debt instruments,
equities, and shares in pooled investment vehicles
secondary - answer__ markets; where securities are traded among investors
money market - answer the market for short term debt instruments (one year maturity or
less)
capital market - answer the market for trading of securities of longer duration, such as
bonds and equities
companies, governments - answer the most common issuers of securities
warrant - answer securities issued by a corporation that allow the holder to buy a
security issued by that corporation, if they so desire, usually at any time before they
expire, or if not, upon expiration
open ended - answer these funds issue new shares and redeem existing shares on
demand, usually on a daily basis; the price is based on the net asset value (assets less
liabilities per share)
closed end - answer these funds issue shares in primary market offerings that the fund
or its investment bankers arrange; one issued, investors cannot sell their shares of the
fund back to the fund by demanding redemption by must sell their shares to other
investors in the secondary market; generally trade at a discount to their net asset values
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