1. Explain the functions of a modern financial system.

2. Categorise the main types of financial institutions, being depository financial

institutions, investment banks and merchant banks, contractual savings institutions,
finance companies and unit trusts.

3. Concisely explain the roles of surplus and deficit units.

4. Discuss the contribution of the money market to the flow of funds.

5. Distinguish between various financial market structures, including wholesale markets
and retail markets, and money markets and capital markets.

6. Discuss the nature of the flow of funds between savers and borrowers, including primary
markets, secondary markets, direct finance and intermediated finance.

7. Describe the main financial feature of promissory notes and assess their importance
within the money market.

8. Explain market operations by the RBA both when the target cash rate is changed and on
a daily basis when the bank is keeping the cash rate at the target rate.

9. Summarise the broad feature of bond issued in the Australian bond market.

10. What are semi-government bonds? Suggest several reasons why they are issued by a
state governments central borrowing authority.

11. Describe the rights and liabilities of holders of ordinary shares.

12. Describe the three general functions performed by secondary markets for equities.

13. Explain how a market-capitalisation index is calculated.