1. What crucial role do banks and other financial institutions play?

Banks play a big role in storing, pooling and eventually lending it to people who needs it.
They store your money and promise an interest rate and for it to grow, you need years for
it to sit there and eventually it will grow. They do this for a lot of customers and eventually
find someone who desperately needs money for something and by that time, they will lend
the money they pooled for that person and in return, the person will also have an interest
rate.

2. Give Three important reasons why is there a need to study Financial Markets?
The allocation of capital is one of the primary purposes of financial markets. Capital
markets promote the raising of capital, whereas money markets facilitate the transfer of
liquidity, linking those with capital to those who need it in both circumstances. Financial
markets collect cash from investors and channel them to businesses that use that capital
to finance operations and grow, from startup to expansion–even far later in the
company's life cycle. Borrowers would have a tough time obtaining lenders if financial
markets did not exist. Banks and other intermediaries assist with this process. Bank
deposits are a straightforward method of allocating capital from a pool of savers to firms
who need it.

3.  Describe what money is.

Money is a form of currency where we exchange to get something else. Money is a
commodity that is widely acknowledged as a means of economic exchange. It is the
vehicle through which prices and values are communicated. It is the primary measure of
wealth and circulates from person to person and country to country, promoting trade.

4.  Enumerate and describe the sources of money.

 Commodity Money – The value is in the object in itself
 Representative Money – The owner can exchange it to something else of value
 Fiat Money – it is an acceptable way to pay debts because the government
deemed it so.

5.  Briefly describe each of the four main functions of money.

 A medium of exchange – allows to have a form of exchange to happen between
two parties.
 Store of value – Money needs to have “worth”
 Unit of account – Helps compare the value of two different items
 Standard of deferred payment – makes a contract to someday pay it