Lesson 4.4.1
4.4.1 Role of financial markets Quiz: Pearson Edexcel Economics, Unit 4
20 questions
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Lesson 4.4.1, Role of financial markets: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 4: Theme 4: A global perspective, written with Revision Ninja.
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The 20 questions
-
Which function of financial markets channels funds from savers to borrowers?
- Quantitative easing
- Fiscal expansion
- Financial intermediation
- Market rigging
-
How do financial markets facilitate the exchange of goods and services?
- Providing payment systems
- Imposing trade tariffs
- Issuing corporate taxes
- Fixing commodity prices
-
What is agreed today in a currency forward market contract?
- Current tax rate
- Future inflation rate
- Future exchange rate
- Current spot rate
-
Why would a UK exporter enter into a currency forward contract?
- Increasing profit margins
- Eliminating corporate tax
- Avoiding import tariffs
- Hedging exchange risk
-
What is the primary function of a commodity forward market?
- Maximising tariff revenue
- Restricting foreign imports
- Hedging price volatility
- Increasing spot prices
-
What financial instrument is issued on a stock market to raise capital?
- Corporate bonds
- Commercial paper
- Treasury bills
- Shares
-
Which of the following is an example of a market for equities?
- Interbank lending market
- Money market
- Foreign exchange market
- London Stock Exchange
-
Which function of financial markets allows households to delay current consumption?
- Market rigging
- Providing forward markets
- Facilitating saving
- Setting tax rates
-
What do financial markets channel to businesses to fund physical investment?
- Dividends
- Subsidies
- Savings
- Taxes
-
What incentive do financial institutions offer households to facilitate saving?
- Interest payments
- Tax rebates
- Subsidies
- Dividend payouts
-
Which market allows firms to hedge against foreign exchange rate risk?
- Spot market
- Forward market
- Money market
- Equity market
-
What type of finance is provided when a bank lends funds directly to a business?
- Equity finance
- Venture capital
- Dividend finance
- Debt finance
-
When are transactions settled in a spot currency market?
- At a future date
- At year end
- After five years
- Immediately
-
What type of return do holders of equities receive from company profits?
- Dividends
- Capital gains tax
- Coupon payments
- Interest payments
-
Which market function provides long-term debt finance to firms expanding operations?
- Lending to businesses
- Facilitating exchange
- Market rigging
- Currency forwarding
-
Forward contracts in financial markets are primarily used for which purpose?
- Setting interest rates
- Hedging risk
- Speculative trading
- Tax evasion
-
Which of the following is NOT a core function of financial markets?
- Providing equity markets
- Facilitating saving
- Setting tax rates
- Lending to businesses
-
What key economic process is improved by efficient financial markets?
- Wealth equality
- Government spending
- Capital allocation
- Tax collection
-
What type of financial asset is traded on a bond market?
- Physical commodities
- Foreign currencies
- Company equities
- Government debt
-
A bank loan taken out by a firm represents which type of finance?
- Debt finance
- Equity finance
- Grant finance
- Transfer payment
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