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Answers to supplementary objective test questions

CHAPTER 3 – THE FINANCIAL CONTEXT OF BUSINESS I

3.1 A

The money market is concerned with short-term finance, the capital market is
concerned with the long term. So answer is banks and discount houses.

So A – (i) and (ii).

3.2 B

Financial intermediaries link borrowers with savers.

3.3 C

Venture capital is similar to share capital in that it is a long-term liability.

3.4 B

Yield = 6/90 × 100% = 6.67%

3.5 B

1/0.4 = 2.5
2.5 × £1,000 = £2,500.

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