Which of the following is an example of capital loss?(1 point)

Question

Which of the following is an example of capital loss?(1 point)
Responses

An investor purchases a bond on the secondary market above its issue price.
An investor purchases a bond on the secondary market above its issue price.

An investor sells a bond on the secondary market below the price she paid for it.
An investor sells a bond on the secondary market below the price she paid for it.

An investor purchases a bond on the secondary market below its issue price.
An investor purchases a bond on the secondary market below its issue price.

An investor sells a bond on the secondary market above the price she paid for it.
An investor sells a bond on the secondary market above the price she paid for it.

GPT-4o mini · Answer

The correct response that exemplifies a capital loss is:

An investor sells a bond on the secondary market below the price she paid for it.

This situation results in a capital loss because the investor is selling the bond for less than what she originally paid.

it boy · Answer

Nasdaq, the American Stock Exchange, and the OTC market collectively form the(1 point) Responses stockbrokers. stockbrokers. brokerage firms. brokerage firms. money market. money market. stock market.

GPT-4o mini · Answer

The correct response is: **stock market.** Nasdaq, the American Stock Exchange (AMEX), and the OTC market collectively form the stock market, where various securities are bought and sold.

it boy · Answer

Which of the following is an example of direct finance?(1 point)
Responses

An individual deposits funds into a savings account at his credit union.
An individual deposits funds into a savings account at his credit union.

An individual applies for a mortgage through a mortgage bank.
An individual applies for a mortgage through a mortgage bank.

A small business opens a line of credit from a commercial bank.
A small business opens a line of credit from a commercial bank.

A company sells its stocks to investors.

GPT-4o mini · Answer

The correct response that exemplifies direct finance is:

A company sells its stocks to investors.

In direct finance, borrowers obtain funds directly from the financial markets without going through financial intermediaries, such as banks. Selling stocks directly to investors is a prime example of this.

it boy · Answer

Which of the following illustrates the function of the financial market?(1 point)
Responses

Saved funds are transferred to lenders via the issuing of bank loans.
Saved funds are transferred to lenders via the issuing of bank loans.

Saved funds are transferred to borrowers via the issuing of bank loans.
Saved funds are transferred to borrowers via the issuing of bank loans.

Saved funds are transferred to borrowers via the sale of newly-issued securities.
Saved funds are transferred to borrowers via the sale of newly-issued securities.

Saved funds are transferred to lenders through the sale of newly-issued securities.

GPT-4o mini · Answer

The correct response that illustrates the function of the financial market is:

Saved funds are transferred to borrowers via the sale of newly-issued securities.

This statement reflects the role of financial markets in channeling savings from investors to borrowers, allowing companies and governments to raise funds by issuing securities.

it boy · Answer

Which of these displays the function of the financial market?(1 point)
Responses

Receiving bank loans
Receiving bank loans

Providing bank loans
Providing bank loans

Saved funds are transferred to borrowers via the sale of newly-issued securities. Companies receive money from selling stocks to investors.
Saved funds are transferred to borrowers via the sale of newly-issued securities. Companies receive money from selling stocks to investors.

interest paid on a saving account

GPT-4o mini · Answer

The correct response that displays the function of the financial market is:

Saved funds are transferred to borrowers via the sale of newly-issued securities. Companies receive money from selling stocks to investors.

This option effectively captures the primary function of financial markets, which is to facilitate the flow of funds from savers to borrowers by allowing companies to raise capital through the issuance of securities.