1.

Why is there a need to understand how monetary policy is conducted by the central banks
worldwide?
- "the macroeconomic policy laid down by the central bank," which manages interest
rates, money supply, and functions as the demand side of economic policy to affect
inflation, consumption, growth, and liquidity. Changes in the supply of money will
affect the interest rate and therefore the cost of borrowing money. This will have an
impact on consumption and investment levels in the economy. By understanding
the monetary policy of the central banks, you will know when to invest or save your
money.
2. What crucial role do banks and other financial institution play?
- Financial institutions are companies engaged in the business of dealing with
financial and monetary transactions such as deposits, load investment and currency
exchange. They are the ones channeling funds from those who have surplus funds
to those with shortage of funds, Financial institutions are what financial market
work. Without them financial markets would not be able to move funds from people
who save to people who have productive investment opportunities.
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3. Why is understanding how financial institutions are managed important to your life?
- Understanding how financial institution are managed is important because there
will be many times in my life, as an individual, an employee, or the owner of the
business, I will interact with them.
- As an individual, knowing how financial institutions are managed may help you get
me a better deal when I need to borrow from them or if I decide to supply them
with funds.
- As an employee, it can help understand where my salary deductions go or how they
are used like for example the pension fund.
- As the owner of the business, if I am short of funds or capital for my business, I
know where to get funds.
4. Give three important reasons why is there a need to study financial market?
- It will help you understand how funds are transferred from people who have an
excess of available funds to people wo have shortage.
 - It affects the national and world economy growth. Financial markets are a key
factor in producing high economic growth and poorly performing financial markets
are the one reason that many countries in the world remain desperately poor.
- Activities also have direct effects on personal wealth, the behavior of the business
and consumers, and the cyclical performance of the economy.
5. What is the most significant role that financial markets play?

- Financial markets have the basic function of getting people together by moving
funds from those whose have surplus of funds to those who have a shortage of
funds by means of trading. Corporations rely on the financial markets to provide
funds for short term operations and for new plant and equipment. A firm may go to
the markets and raise financial capital by either borrowing money through a debt
offering of corporate bonds or short term notes, or by selling ownership in the
company through an issue of common stock