Respond to five questions about financial markets, financial institutions, and interest rates.
It is necessary to be able to apply the knowledge you have gained by classifying market transactions and financial instruments and by describing how financial markets work.
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:
Competency 1: Evaluate the global financial environment.
Define factors that determine the nominal interest rate on a financial security.
Categorize financial transactions as taking place in the primary or secondary market.
Identify financial instruments as money market securities or capital market securities.
Competency 2: Define finance terminology and its application within the business environment.
Define the concept of terms structure of interest rates.
Describe services offered by each type of financial institution.
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The following optional resources are provided to support you in completing the assessment or to provide a helpful context. For additional resources, refer to the Research Resources and Supplemental Resources in the left navigation menu of your courseroom.
The following e-books or articles from the Capella University Library are linked directly in this course:
Weaver, S. C., & Weston, J. F. (2001). Finance and accounting for nonfinancial managers. New York, NY: McGraw-Hill.
Sherman, E. H. (2011). Finance and accounting for nonfinancial managers (3rd ed.). New York, NY: American Management Association.
Course Library Guide
A Capella University library guide has been created specifically for your use in this course. You are encouraged to refer to the resources in the BUS-FP3062 – Fundamentals of Finance Library Guide to help direct your research.
Cornett, M., Adair, T., & Nofsinger, J. (2019). M: Finance (4th ed.). New York, NY: McGraw-Hill. Available in the courseroom via the VitalSource Bookshelf link.
Respond to the following five questions. Write your responses in a Word document, and number them 1–5.
Categorize each of the following transactions as taking place in either the primary or secondary market:
Supercorp issues $180 million of new common stock.
HiTech, Inc. issues $30 million of common stock in an IPO.
Megaorg sells $10 million of HiTech preferred stock from its marketable securities portfolio.
The XYA Fund buys $220 million of previously issued Supercorp bonds.
A. B. Corporation sells $15 million of XYZ common stock.
Identify whether the following financial instruments are capital market securities or money market securities:
U.S. Treasury bills.
U.S. Treasury notes.
U.S. Treasury bonds.
Negotiable certificates of deposit.
State and government bonds.
Identify the different types of financial institutions. What are the main services each of these financial institutions offers?
Define the six factors that determine the nominal interest rate on a security.
Define the concept of term structure of interest rates. What are three theories that explain the future yield curve of interest rates?
Use references to support your answers as needed. Be sure to cite all references using correct APA style. Your responses should be free of grammar and spelling errors, demonstrating strong written communication skills.
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