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MAF 702 Financial markets

Seminar 1 Solutions

Topic: Introduction to the unit

Text book
Solutions will be uploaded by the end of the week

True/False Solutions
No. Questions True/False
1 Money market is a long term and capital market is a short term market False
2 Preferred stock is a hybrid security True
3 Matching lender and borrower preferences is a difficult task in Direct True
4 Share is a money market instrument False
5 Share trading in the secondary market does not raise new capital for the True
issuing company
6 RBA, ASIC, ACCC and APRA are the key regulatory/supervisory bodies True
in Australia
7 Between equity and debt in the capital structure, equity increases more False
risk of default than debt
8 A share is a primary security, but a derivate (Option, Future, Forward True
and Swaps) is a secondary security
9 Primary market brings new issues into existence and secondary market True
facilitates reselling of existing securities
10 Investment and/or merchant banks generally raise short-term funds in False
the retail money markets

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