Which of the following is NOT correct in the context of financial markets?
Answer & explanation
Correct answer: option 1
The correct answer is option 1- A business is a part of an economic system that consists of three main sectors-households, business and financial market.
A business is a part of an economic system that consists of two main sectors – households which save funds and business firms which invest these funds. A financial market helps to link the savers and the investors by mobilizing funds between them. In doing so it performs what is known as an allocative function. It allocates or directs funds available for investment into their most productive investment opportunity.