Lesson 4.2.4.1

4.2.4.1 The structure of financial markets and financial assets Quiz: AQA Economics, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.2.4.1, The structure of financial markets and financial assets: 20 multiple choice questions for the AQA Economics (7136), Unit 2: The national and international economy, written with Revision Ninja.

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The 20 questions

  1. Which of the following is a primary function of money?

    • Store of equity
    • Financial intermediary
    • Medium of exchange
    • Central bank reserve

  2. Which component is strictly included in narrow money supply?

    • Coins and banknotes
    • Time savings deposits
    • Commercial paper
    • Corporate bonds

  3. What main component distinguishes broad money from narrow money?

    • Less liquid deposits
    • Physical cash only
    • Foreign currency holdings
    • Government debt securities

  4. How does equity finance differ from debt finance for a business?

    • Requires interest payments
    • Grants company ownership
    • Has fixed maturity
    • Must be repaid

  5. What type of financial asset is traded in the money market?

    • Company shares
    • Mortgage equity
    • Long-term bonds
    • Short-term debt

  6. Which method allows a company to raise equity capital rather than debt capital?

    • Securing bank loans
    • Issuing corporate bonds
    • Taking overdrafts
    • Issuing new shares

  7. What is the fixed annual interest payment on a bond called?

    • Principal
    • Yield
    • Maturity
    • Coupon

  8. A bond with a face value of 100 pounds and a 5 per cent coupon is trading at 80 pounds. What is the yield on the bond?

    • 5.00 per cent
    • 12.5 per cent
    • 20.0 per cent
    • 6.25 per cent

  9. A bond with a face value of 100 pounds and a 5 per cent coupon rises in price to 125 pounds. What is its yield?

    • 5 per cent
    • 4 per cent
    • 6 per cent
    • 25 per cent

  10. What happens to existing government bond prices when market interest rates rise?

    • They fall
    • They rise
    • They stay constant
    • They fluctuate randomly

  11. Which source of finance avoids creating a repayment obligation for a business?

    • Share issuance
    • Commercial paper
    • Corporate bond
    • Bank loan

  12. In which financial market are national currencies bought and sold?

    • Money market
    • Foreign exchange market
    • Commodity market
    • Capital market

  13. Which asset is included in broad money but excluded from narrow money?

    • Banknotes
    • Time deposits
    • Sight deposits
    • Coins

  14. A government bond with a face value of 100 pounds pays 3 pounds each year. What is its coupon rate?

    • 10 per cent
    • 3 per cent
    • 0.3 per cent
    • 30 per cent

  15. In which market are long-term financial instruments like shares and corporate bonds traded?

    • Money market
    • Commodity market
    • Capital market
    • Foreign exchange market

  16. If a government bond's market price increases, what happens to its yield?

    • It becomes zero
    • It stays constant
    • It rises
    • It falls

  17. A bond with a 5 pound annual coupon falls in price to 90 pounds. What is the approximate yield?

    • 10.00 per cent
    • 4.50 per cent
    • 5.56 per cent
    • 5.00 per cent

  18. Which form of finance requires fixed repayments regardless of a firm's profits?

    • Retained profit
    • Share capital
    • Debt finance
    • Equity finance

  19. What main economic function do financial markets perform?

    • Fixing price ceilings
    • Collecting tax revenue
    • Allocating investment capital
    • Setting tariff rates

  20. Which asset is traded in a capital market rather than a money market?

    • Corporate bond
    • Commercial paper
    • Treasury bill
    • Interbank loan

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