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Multiple Choice
Which three main activities do the global equity markets allow firms to perform?
A
Prepare tax returns, audit financial statements, and manage payroll
B
Raise capital, facilitate share trading, and provide liquidity
C
Produce goods, manage supply chains, and control production costs
D
Set interest rates, issue government bonds, and regulate inflation
Verified step by step guidance
1
Understand the role of global equity markets in the financial system. Equity markets are platforms where companies can interact with investors to raise funds and trade ownership shares.
Identify the three main activities that global equity markets enable firms to perform. These activities are related to capital raising, trading, and liquidity provision.
First, global equity markets allow firms to raise capital by issuing shares to investors. This is a primary market activity where companies sell new shares to fund operations, expansion, or other financial needs.
Second, equity markets facilitate share trading. This occurs in the secondary market, where investors buy and sell existing shares, enabling ownership transfer and price discovery.
Third, equity markets provide liquidity. Liquidity ensures that shares can be quickly bought or sold without significantly affecting their price, making the market efficient and attractive to investors.