3. Securities in financial markets Financial market participants have a variety of securities they can choose to issue or purchase in order to support their financial needs. Such securities are money market securities, capital market securities, and derivative securities. Use the following table to determine whether each definition describes money market, capital market, or derivative securities. Security Type Definition Short-term securities that have a maturity of one year or less. Long-term securities that have a maturity greater than one year. Financial contracts whose values are derived from the values of the underlying assets. Use the following table to determine whether each example is a money market, capital market, or derivative security. Security Type Example A wheat farmer establishes a forward contract with a wheat milling firm to sell 35 bushels of wheat six months from now. Common stock. Securities that are commonly used to finance the purchase of buildings, equipment, or machinery Securities that generally have the highest degree of liquidity. 4. Determinants of security values For decades in the U.S., street vendors have popped up in densely populated areas, such as major cities, beaches, and festivals. These businesses sell things from hamburgers and hot dogs to tacos and Mexican street corn. After the recession hit between 2008 and 2009, the U.S. saw an increase in the number of mobile food businesses, namely an increase in the number of food trucks. Because this is the first time this industry has seen this much growth, suppose investors look carefully at historical food truck financial records, customer feedback, and any other information they can get their hands on to give them better insight into the industry's potential performance. After investors review this information, suppose they determine that there is a high likelihood of the businesses generating high cash flows, and thus a high return on their investment, and they revise their valuations of the stocks accordingly. True or False: Given the scenario, the investors are using firm-specific information to take their positions on the security. True False Use the graph to show what happens to the supply, demand, and equilibrium price in the market for food truck stocks in the short run, assuming that if supply and demand change, they do so simultaneously. ? Secondary market for food truck stocks Supply Demand Supply Price - Demand Quantity Now suppose that instead of determining the businesses have a high likelihood of generating high cash flows, investors determine that there is a high degree of uncertainty surrounding the businesses' cash flow generation. True or False: Given the scenario, the investors are using firm-specific information to take their positions on the security. True False Use the graph to show what happens to the supply, demand, and the equilibrium price in the market for food truck stocks in the short run, assuming that if supply and demand change, they do so simultaneously. ? Secondary market for food truck stocks Supply Demand Supply Price - - - 1 - - - Demand Quantity