Benefits of Capital Markets: Benefits To The Economy - SS2 Accounting Past Questions and Answers - page 1
What is one benefit of capital markets to the economy?
Efficient allocation of capital
Increased government control
Higher taxes for businesses
Reduced liquidity
What is the primary purpose of capital markets in the economy?
To increase government spending
To allocate capital efficiently
To reduce competition among businesses
To decrease economic growth
What is price discovery in the context of capital markets?
The ability to buy and sell securities quickly and easily
The process of determining the fair price of securities
The range of risk management tools available to investors
The ability of businesses to access funding for growth
What role do capital markets play in managing risk?
They increase liquidity
They provide a range of risk management tools
They reduce economic growth
They decrease government control
How can capital markets contribute to economic growth?
By reducing competition among businesses
By increasing government spending
By providing businesses with the funding they need to expand and innovate
By decreasing liquidity in financial markets
What is the relationship between capital markets and economic growth?
Capital markets can contribute to economic growth by providing businesses with the funding they need to expand, create jobs, and drive innovation.
What is the role of price discovery in capital markets?
The role of price discovery in capital markets is to provide a transparent platform for buyers and sellers to determine the fair price of securities. This helps ensure that securities are priced efficiently and that investors receive fair value for their investments.