Question at position 1 Which best describes the main purpose of capital markets?To manage the supply of cash in the economyTo set government interest ratesTo move money from savers to borrowers for long-term investmentTo guarantee profit to all investors

Question

Question at position 1 Which best describes the main purpose of capital markets?To manage the supply of cash in the economyTo set government interest ratesTo move money from savers to borrowers for long-term investmentTo guarantee profit to all investors

BlackTom AI · Accepted Answer

Capital markets channel long-term funds from those with excess savings to those who need capital for investment, so the best description is that they move money from savers to borrowers for long-term investment.

1. Relevant knowledge points and concepts
- Capital markets: markets for long-term financial instruments such as stocks and bonds. They include primary markets (issuance) and secondary markets (trading).
- Participants: savers/investors, firms/governments seeking capital, intermediaries (investment banks, brokers), and regulators.
- Functions: allocation of capital, price discovery, liquidity provision, risk allocation, and facilitating long-term investment and economic growth.

2. Step-by-step reasoning
- Identify the instruments: equity and debt securities are issued to raise long-term funds.
- Trace the flow: savers buy securities (provide funds) → firms/governments receive funds (borrowers use for investment) → securities can be traded on secondary markets, providing liquidity.
- Outcome: capital is mobilized to finance projects, expansion, infrastructure—supporting long-term economic activity.

3. Intermediate steps (conceptual)
- Primary issuance: company issues stock/bonds → receives cash from investors.
- Secondary trading: investors trade existing securities → liquidity and price signals.
- Returns & risks: investors expect returns, firms pay cost of capital; markets allocate risk among participants.

4. Why the correct answer is correct
Capital markets are specifically designed to facilitate long-term financing and match long-term savers with borrowers who need funds for investment. This is their central economic purpose.

5. Why the other options are incorrect
- “To manage the supply of cash in the economy”: that is the role of central banks and monetary policy, not capital markets.
- “To set government interest rates”: central banks influence interest rates; capital markets reflect rates through supply/demand.
- “To guarantee profit to all investors”: markets cannot guarantee profits; they involve risk and expected returns, with no universal guarantee.

Conclusion: The correct choice is “To move money from savers to borrowers for long-term investment,” which matches the provided answer.

Question at position 1 Which best describes the main purpose of capital markets?To manage the supply of cash in the economyTo set government interest ratesTo move money from savers to borrowers for long-term investmentTo guarantee profit to all investors多项选择题

类似问题

IBM is a listed firm and its previously issued stocks are traded on NYSE. A sale by IBM of new stock to the public would be a(n)

Property markets are where valuations are determined. Valuations require as inputs: (1) cash flows, (2) a required rate of return. In which markets are those inputs determined?

Dissatisfied capital market stakeholders may:

Which of the following is an example of both a capital market and a secondary market transaction?

Which of the following is an example of both a capital market and a secondary market transaction?

Which of the following is an example of both a capital market and a secondary market transaction?

BHP needs to raise $100 million to purchase a new iron ore mine. Which of the following securities should BHP NOT use to raise the fund?

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单

Question at position 1 Which best describes the main purpose of capital markets?To manage the supply of cash in the economyTo set government interest ratesTo move money from savers to borrowers for long-term investmentTo guarantee profit to all investors多项选择题

类似问题

IBM is a listed firm and its previously issued stocks are traded on NYSE. A sale by IBM of new stock to the public would be a(n)

Property markets are where valuations are determined. Valuations require as inputs: (1) cash flows, (2) a required rate of return. In which markets are those inputs determined?

Dissatisfied capital market stakeholders may:

Which of the following is an example of both a capital market and a secondary market transaction?

Which of the following is an example of both a capital market and a secondary market transaction?

Which of the following is an example of both a capital market and a secondary market transaction?

BHP needs to raise​ $100 million to purchase a new iron ore mine. Which of the following securities should BHP NOT use to raise the​ fund?

更多留学生实用工具

希望你的学习变得更简单

BHP needs to raise $100 million to purchase a new iron ore mine. Which of the following securities should BHP NOT use to raise the fund?