Benefits of Capital Markets - SS1 Economics Past Questions and Answers - page 1
What is the primary purpose of capital markets?
By providing investment advice
By diversifying their portfolio
By offering insurance against market volatility
By offering guaranteed returns on investment
Which of the following is a benefit of capital markets for businesses?
Limited access to funding sources
Difficulty in raising long-term capital
Increased competition from investors
Opportunities for growth and expansion
What is the role of capital markets in promoting economic growth?
Restricting investment in new businesses
Discouraging the adoption of new technologies
Facilitating investment in new businesses and technologies
Encouraging short-term investments
How do capital markets help investors manage risk?
By providing investment advice
By diversifying their portfolio
By offering insurance against market volatility
By offering guaranteed returns on investment
Explain how capital markets can help to channel savings into productive investments.
Capital markets facilitate the transfer of funds from investors to borrowers, which helps to channel savings into productive investments. These funds can then be used by producers and investors to develop new technologies and innovations from once-saved funds.
Mention 3 benefits of the capital market.
- Capital markets provide opportunities for investors to diversify their portfolios and manage risk.
- Capital markets promote economic growth by facilitating investment in new businesses and technologies.
- Capital markets enhance the liquidity of financial assets, making it easier for investors to buy and sell securities.