FM B Financial management environment

Which of these is an example of monetary policy?

• 1 A new subsidy
• 2 A rise in income tax
• 3 A cut in public spending
• 4 A central bank raising interest rates

Which market deals mainly with long-term finance?

• 1 The money market
• 2 The foreign exchange market
• 3 The capital market
• 4 The commodity market

Which of these is a money market instrument?

• 1 A treasury bill
• 2 A long-term bond
• 3 An ordinary share
• 4 A debenture over land

In which market are new shares first issued?

• 1 The money market
• 2 The secondary market
• 3 The futures market
• 4 The primary market

What is the role of a financial intermediary?

• 1 To audit companies
• 2 To set interest rates by law
• 3 To channel funds from savers to borrowers
• 4 To collect taxes

A rise in interest rates generally has what effect on a company's investment appraisal?

• 1 It has no effect
• 2 It raises the cost of finance and lowers the value of future cash flows
• 3 It raises all cash flows
• 4 It removes risk