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SDSU BA 323 FINANCE EXAM 1 NEWEST 2025 ACTUAL
EXAM COMPLETE QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS) |A+
GRADED
Who are suppliers of capital? Who are providers of capital? Can an entity be both at the same time? - ANSWER-Suppliers of capital include retail and institutional investors while users of capital are businesses, governments, and people.
•What is a market?•What is the main difference between private and public markets? - ANSWER-A market is a venue where goods and services are exchanged. Private markets are negotiated directly between parties (bank loans) while public markets are standardized contracts traded on organized exchanges (NYSE).
•The derivative market exceeds 700 trillion. What type of derivative is most common? - ANSWER-Derivatives are like contracts. An individual pays for a product/service in its current value but would receive that at a later date. Forwards, futures, options, and swaps are the most common types of derivative.
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Know the difference between primary and secondary market transactions and be able to identify one from the other. - ANSWER-Primary market is the market in which corporations raise new capital by selling new stock. The secondary market involves trading existing securities among investors and does not involve any new inflows of funds to the corporation.
•What are the five different types of financial markets?•Know the difference between each type of market - ANSWER- Physical assets vs Financial assets
Spot vs Futures
Money vs Capital
Primary vs secondary
Public vs private
Physical assets vs. Financial assets - ANSWER-Physical: for
products such as wheat, autos, real estate, computers and machinery. 2 / 3
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Financial: for stocks, bonds, notes and mortgages.
Deal with derivative securities (values are derived from changes in the prices of other assets).
A share of Ford stock is a "pure financial asset." An option to buy Ford shares is a derivative security whose value depends on the price of Ford stock.
Spot vs. Futures - ANSWER-Assets are bought/sold on the spot for Spot Markets while Future markets involves selling products at a future date at a price agreed on today.
Money Markets vs. Capital Markets - ANSWER-Money: for
short-term (less than 1 year) highly liquid debt securities. (New York, London and Tokyo money markets)
Capital: for intermediate (1-10 years) or long-term (more than
10 years) debt and corporate stocks (New York stock exchange)
•What are derivatives?•Which type of derivative is most frequently used? Which?
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