Accounting 321

Running Head: Cha

Chapter 14

14-1. what are financial markets? What function do they perform? How would an economy be?

Worse off without them? A financial market is a mechanism that allows people to easily buy and sell (trade) financial securities (such as stocks and bonds). The raising of capital (in the capital markets), the transfer of risk (in the derivatives markets) and International trade (in the currency markets). The economy would be none exist with out a financial market, with financial markets buyers and sellers can easily trade and sell and have communication with one another. So yes the economy will be worst off with out financial markets.

14-3. Distinguish between the money and capital markets. The money market is the global financial market for short-term borrowing and lending. The capital market is the market for securities, where companies and governments can raise long-term funds. It is a market in which money is lent for periods longer than a year. The capital market includes the stock market and the bond market.

14-4. what major benefits do corporations and investors enjoy because of the existence of organized security exchanges? The trading on organized commodity and security exchanges: because it does not take manipulation and trading on price movements into account. These two kinds of trading have come to be important. Taken together, they have made up the bulk of the organized trading. (Probably manipulation in securities has been reduced decidedly by the Securities Exchange Commission.)

Chapter 15

15-12A. (Break-even point) you are a hard-working analyst in the office of financial operations

For a manufacturing firm that produces a single product. You have developed the following cost

Structure information for this company. All of it pertains to an output level of 10 million units.

Using this information, find the break-even point in units of output for the firm.

Return on operating assets 25%

Operating asset turnover 5...