Which of these displays the function of the financial market?
a- receiving bank loans
b- saved funds are transferred to borrowers via the sale of newly-issues securities. Companies receive money from selling stocks to investors
c- interest paid on a saving account
d- providing bank loans
b- saved funds are transferred to borrowers via the sale of newly-issued securities. Companies receive money from selling stocks to investors.
The correct answer that displays the function of the financial market is:
b- saved funds are transferred to borrowers via the sale of newly-issued securities. Companies receive money from selling stocks to investors.
The function of the financial market involves various activities related to the flow of money, investment opportunities, and financing options. Let's evaluate each option to determine which one best represents the function of the financial market:
a) Receiving bank loans: While the financial market can facilitate the borrowing and lending of money, this option specifically focuses on the receiving of bank loans. Although it is a valid activity within the financial market, it does not encompass its entire function.
b) Saved funds are transferred to borrowers via the sale of newly-issued securities: This option accurately describes one aspect of the financial market's function. When individuals or companies save money, these funds are often channeled into the market through the purchase of securities (such as stocks or bonds) issued by borrowers looking for capital. This process helps allocate funds from savers to borrowers, facilitating investment and capital generation.
c) Interest paid on a saving account: While interest paid on a savings account is an essential element of personal finance and banking, it does not represent the function of the financial market as a whole. Interest payments are typically determined by the actions of financial institutions and their relationship with customers.
d) Providing bank loans: This option focuses solely on providing bank loans, which is a specific activity within the financial market but does not encompass its complete function.
Based on the options provided, option b seems to best represent the function of the financial market as it encompasses the transfer of saved funds to borrowers through the sale of securities.