Question

1. Which of the following statements is NOT correct?

Select one:

a. Money market transactions are seldom below $1 million.

b. Money market securities have short-term maturities.

c. Money markets are operated by dealers.

d. Money markets securities are issued to finance long-term projects

2.

Which of the following cannot manage the operations of the business?

Select one:

a. None of the options.

b. A sole trader.

c. A limited partner.

d. A general partner.

3.

The financial market where new securities are sold for the first time is:

Select one:

a. a secondary market.

b. a primary market.

c. an indirect market.

d. a capital market.

4.

Financing decisions involve:

Select one:

a. raising cash to pay for investments.

b. trade-offs between advantages and disadvantages.

c. all of the options.

d. long-term borrowing for productive assets.

5.

Which of the following transactions occurs in the primary market?

Select one:

a. The Federal government sells Treasury bonds to finance road infrastructure.

b. Mr Slattery sells government bonds to a dealer.

c. Poppy buys Commonwealth Bank shares listed on the Australian Securities Exchange (ASX).

d. A managed fund sells some NAB shares it owns

Answer 1

1. Money market securities are issued to finance long term projects

Explanation: Money market finance is a short term finance, which is used to finance short term project and not long term project.

2. A limited partner

Explanation: A limited partner only provides cash and is not involved in day to day operation of the business.

3. A primary market

Explanation: New shares are issued in primary market

4. Raising cash to pay for investment

Explanation: Financing decision is involved in raising money for finance and is a decision of capital structure.

5. The federal government sells treasury bonds to finance road infrastructure.

Explanation: As the government is issuing bond for the first time, this transaction is to be done in primary market.