QUESTION 1

A managed fund issues units to an insurance company. The insurance company pays for them with the funds raised by issuing bonds to Mrs Smith, who has a surplus after spending on consumption and real assets. The managed fund then buys shares issued by HappyTime, which plans to buy a new holiday resort.

Which entity is the financial intermediary?

A.Insurance company

B.HappyTime

C.The managed fund

D.Both A and B

E.Both A and C

QUESTION 2

Joel buys his grocery with his credit card.In his balance sheet, this results in_____________________.

A.an increase in assets; an increase in liabilities

B.a decrease in liabilities;an increase in equity

C.an increase in liabilities;a decrease in assets

D.a decrease in equity; an increase in assets

E.a decrease in equity; an increase in liabilities