A major telecommunications firm wishes to raise £800 million\pounds 800\text{ million}£800 million of new, non-debt capital to fund a 10-year fiber-optic rollout, while a commercial bank needs to cover a temporary 7-day shortfall in its reserve balances.
Which one of the following combinations, A, B, C or D, correctly identifies the financial market and instrument most appropriate to meet the requirements of both institutions?
| Telecommunications firm | Commercial bank | |
|---|---|---|
| A | Selling existing ordinary shares in the secondary capital market | Issuing 5-year corporate bonds in the primary capital market |
| B | Issuing short-term commercial paper in the primary money market | Borrowing via a 7-day repo agreement in the capital market |
| C | Issuing new ordinary shares in the primary capital market | Borrowing on the interbank money market |
| D | Issuing treasury bills in the secondary money market | Accessing long-term equity in the primary money market |
A\textbf{A}A
B\textbf{B}B
C\textbf{C}C
D\textbf{D}D
176 exam-style questions on AQA A Level Economics 2.4 Financial markets and monetary policy (A-level only), covering 2.4.1 The structure of financial markets and financial assets, 2.4.2 Commercial banks and investment banks, 2.4.3 Central banks and monetary policy, and 2.4.4 The regulation of the financial system. Each one has a worked solution and a mark scheme showing where the marks go.