Market Classification

Question 1

What are the two main types of markets in capital market classification?

Answer 1

Primary Market and Secondary Market

Question 2

True or False: The primary market is where securities are issued for the first time.

Answer 2

True

Question 3

What is the primary function of the secondary market?

Answer 3

To facilitate the trading of existing securities.

Question 4

Fill in the blank: In the primary market, companies raise capital by selling __________.

Answer 4

new securities

Question 5

Which market involves the buying and selling of previously issued securities?

Answer 5

Secondary Market

Question 6

What is an example of a primary market transaction?

Answer 6

An initial public offering (IPO)

Question 7

True or False: Investors can buy shares directly from the company in the secondary market.

Answer 7

False

Question 8

What role do underwriters play in the primary market?

Answer 8

They help issuers sell new securities to investors.

Question 9

Which market is more liquid, primary or secondary?

Answer 9

Secondary Market

Question 10

Fill in the blank: The __________ market is essential for price discovery of securities.

Answer 10

secondary

Question 11

What is a significant feature of the primary market?

Answer 11

Securities are sold directly by the issuer.

Question 12

True or False: The secondary market does not involve the original issuer of the securities.

Answer 12

True

Question 13

What type of securities are typically traded in the primary market?

Answer 13

Newly issued stocks and bonds

Question 14

What is the main source of funding for companies in the primary market?

Answer 14

Investor capital

Question 15

What is a common method for companies to access the primary market?

Answer 15

Conducting an IPO

Question 16

Fill in the blank: The __________ market allows for the resale of securities.

Answer 16

secondary

Question 17

What is a key advantage of the secondary market for investors?

Answer 17

Increased liquidity

Question 18

True or False: The secondary market is essential for the functioning of the primary market.

Answer 18

True

Question 19

What is the role of the stock exchange in the secondary market?

Answer 19

To provide a platform for trading securities.

Question 20

What does ‘capital market classification’ refer to?

Answer 20

The categorization of markets based on the nature of transactions.

Question 21

What is the main goal of the primary market?

Answer 21

To raise new capital for issuers.

Question 22

Fill in the blank: Investors in the __________ market can sell their securities to other investors.

Answer 22

secondary

Question 23

What type of market is characterized by higher volatility, primary or secondary?

Answer 23

Secondary Market

Question 24

What is an example of a secondary market transaction?

Answer 24

Buying shares of a company on a stock exchange.

Question 25

True or False: The primary market includes both public and private offerings.

Answer 25

True

Question 26

What happens to the proceeds from sales in the secondary market?

Answer 26

They go to the selling investors, not the issuing company.

Question 27

What is the importance of market makers in the secondary market?

Answer 27

They provide liquidity by being ready to buy and sell securities.