Reference no: EM132582112

Question 1) Discuss the primary role of the financial system in the economy, and how fund transfers take place.

Question 2) Briefly describe a financial intermediary.

Question 3) Describe and state the following principal types of financial intermediaries in the Australian financial market, complete answer in the following table format:

Type of financial intermediaries and example

Primary services offered within the Australian Financial Markets

Bank financial intermediaries

• Commercial banks

E.g. Commonwealth Bank of Australia (CBA)

A financial institution that accepts deposits, makes loans and provides other services to the public.

Non-bank financial intermediaries

1. Building societies
2. Credit unions
3. Money market corporations
4. Finance companies
5. Insurance companies
6. Superannuation funds

Investment companies

1. Managed funds
2. Hedge funds
3. Private Equity funds

Question 4) Securities are broadly classified as debt securities (bonds) and equity securities (shares). Briefly explain how securities market provide a link between the corporation and investors.

Question 5) Equity securities are financial instruments that represent ownership claims on a business. Equity securities for corporations are called Shares and can be bought and sold in the stock market. Explain the difference the two main types of equity securities:

• Ordinary Shares

• Preference Shares.

Question 6) Debt securities are financial instruments that represent short or long term loans to corporations. Explain the difference the two main types of debt securities:

• A note

• A bond