The flow of funds between sectors varies but some

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Unformatted text preview: vided into four sectors: business corporations, financial corporations, government and household sectors. The flow of funds between sectors varies but some generalisations are A) possible. In general, which of the following is correct? the business sector is usually a deficit sector and the household sector is a surplus sector B) the business and household sectors are usually deficit sectors Feedback: The businessfinancialusually has a deficit each year as funds are raised to finance investment in C) the sector corporations and government sectors are usually surplus sectors additional assets and the household sector usually has a surplus. The financial corporations sector is often D) tends to have a small deficit sectors are usually deficit sectors close to balanced or the household and government whilethe government sector may have either a surplus or a deficit depending largely on the commonwealth government’s budgetary position. Consequently, A is correct but B, C and D are all incorrect. See page 31. 16 4 16 INCORRECT Wholesale market transactions are most accurately described as: A) transactions where non-bank institutions deposit surplus funds with banks B) direct transactions between institutional investors and borrowers C) direct transactions between large corporations and merchant banks Feedback: The classification of financial transactions as either ‘wholesale’ or ‘retail’ is based mainly on the size D) (value) of the transaction. Transactions in the wholesale market are large and generally involve financial transactions of more than $1 million government corporations and financial intermediaries institutions dealing directly with large corporations or between largeauthorities. The transactions referred to in A, C and D are examples of wholesale transactions but such transactions are not limited to the types of institutions mentioned. The description in B is more general, making it the correct answer. See page 22. 17 4 17 INCORRECT A company that issues promissory notes is: A) raising funds in the commercial paper market B) issuing discount securities C) usually raising funds on an unsecured basis D) all of the above F...
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This note was uploaded on 03/26/2012 for the course FIN 1612 at University of New South Wales.

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