FINS1612 Chapter 1: Viney8e_IRM_ch01
Document Summary
The real economy and the financial system are connected. The accumulated funds in the trust are pooled and invested in asset classes specified within the trust deed: commercial banks dominate in terms of their share of the assets of financial institutions. 2: another category of instruments is derivatives (futures, forwards, swaps and options). The main use of a derivative is in the management of commodity and financial risks. Learning objective 1. 5: distinguish between various financial market structures, including wholesale markets and retail markets, and money markets and capital markets: the financial markets are categorised as money markets (short-term securities) and capital markets (longer-term securities). The lingering effects of the crisis and new concerns about the economic stability of many developed nation-states continue to weigh on the financial markets. The gfc highlighted the importance of maintaining stability in the financial system. The following suggested answers incorporate the main points that should be recognised by a student.
