Olimba, Alicia Dawn A.

BSBA-FM
1Y-PM-G 06

1. What role do financial markets play in the economy?

Financial markets play an important role in facilitating the smooth operation of
capitalist economies by allocating resources and creating liquidity for businesses
and entrepreneurs. The markets make it simple for buyers and sellers to trade
their financial holdings. Financial markets create securities products that provide
a return for those who have excess funds (investors/lenders) and make these
funds available to those who require additional funds (borrowers).

2. What are the futures market's functions?

The function of futures markets
 Provides and operates the facilities for trading;
 Establishes, monitors and enforces the rules for trading; and.
 Keeps and disseminates trading data.

3. Which component of the financial system is the most interconnected?

In my own opinion, the most interconnected is the financial market because it is
the market place where buyers and sellers interact with each other and
participate in the trading of bonds, shares, and other assets. It is further
subdivided into money markets and capital markets. Money markets deal with
short-term financial assets (those with maturities of less than a year), whereas
capital markets deal with financial assets with maturities of more than a year.
This can also help with the creation and allocation of credit and liquidity, acting
as intermediaries for the mobilization of savings, achieving balanced economic
growth, and providing financial convenience.

4. Do you believe that the financial system has an impact on economic

growth?

Yes, because financial markets direct credit allocation throughout the economy, it
facilitates the production of goods and services. It also decides which
investments will be funded and which will not. The financial system is also
particularly important in reallocating capital and thus providing the basis for the
continuous restructuring of the economy that is needed to support growth.