1.True or False

1. Financial Instruments are not crucial to the operation of the economy. False
2. Financial arrangements can only be formal.

1. Shareholders have limited liability, so their losses cannot exceed their initial investments.

1. Regulatory environment of Canadian financial institutions is strong.

1. Monetary policy does not influence the economy.

2. Fill in the blanks

1. There is a strong _________ correlation between money growth and inflation.

(Positive, negative)

1. Shifts in velocity are caused by changes in the ________ for money.

(Demand, supply)

h. Financial crises are a _________ feature of financial markets.

(Persistent, abnormal)

1. Different areas and countries of the world use ________ currencies in their transactions

(Different, same)

1. Stock_________ are fundamental to the functioning of a market-based economy. (Prices, Values)

a. How do you decide where to invest, and explain stock market 's role in the financial and business world?

b. Define and narrate, "The theory of efficient markets" and its role in economy.

c. What do Crashes, and Bubbles do to the health of financial markets?

d. Costs of buying and selling of investment.

e. Characteristics of a well-run financial market.

4. Structure of financial industry in Canada in the light of current economic and business environment.

5.Explain how bond prices are determined and why they change with special reference to Canada.