Untitled Deck Flashcards
(2 cards)
Question 1
Isterim Co is a large pharmaceutical company, listed on an internationally-recognised
stock exchange. The board intends to raise finance of $150m in order to fund the
development of a new product but needs advice on how best to raise this amount of
capital.
Which of the following intermediaries would be the best source of advice?
An understanding of the role of financial interme
What does this test?
An understanding of the role of financial intermediaries
B. Investment bank
An investment bank will provide a range of banking services to its clients, including
advice on raising capital.
Discount houses trade in investments such as bills of exchange rather than provide
advice on corporate finance. Unit trusts invest in securities to earn returns rather than
provide advice. Clearing banks are concerned with providing daily banking services
rather than providing corporate finance advice.
Question 2
Which TWO of the following are NOT money market instruments?
A. Bills of exchange
B. Commercial paper
C. Preference shares
D. Banker’s acceptance
E. Irredeemable loan note
The correct answer is C and E
This test understanding of the FI available on the money markets
This question tests candidates’ knowledge of the financial instruments that are available on the money markets and more specifically, the understanding that the money markets are geared towards short-term finance. Irredeemable loan notes and preference shares are long-term financial instruments that are not available on the money markets.
