OVERVIEW OF CAPITAL MARKET

Question 1

refer to a market where securities such as stocks, bonds, and derivatives are traded among buyers and sellers. These markets play an important role in the economy by facilitating the flow of capital from those who have surplus funds to those who need funds for investment and growth.

Answer 1

CAPITAL MARKET

Question 2

how companies, governments, and other organizations can raise funds through the issuance and sale of securities.

Answer 2

Raising Capital

Question 3

how capital markets allow individuals and institutions to buy and sell securities, providing liquidity to the markets.

Answer 3

Providing Liquidity

Question 4

how capital markets allocate capital to its most efficient use through the interactions between buyers and sellers.

Answer 4

Allocating Capital

Question 5

how capital markets determine the price of securities and help ensure that the markets are efficient.

Answer 5

Price Discovery

Question 6

how capital markets encourage savings and investment, which are important drivers of economic growth and development.

Answer 6

Facilitating Savings and Investment:

Question 7

place where securities that have already been issued and are outstanding are bought and sold. This is where individuals and institutions trade securities, such as stocks and bonds, among themselves.

Answer 7

SECONDARY MARKET

Question 8

financial instruments that represent ownership in a company (stocks) or a debt owed by a company or government (bonds).

Answer 8

SECURITIES

Question 9

securities that represent ownership in a pool of real estate assets, such as commercial or residential properties.

Answer 9

Real Estate Investment Trusts (REITs)

Question 10

is the place where new securities are first offered to the public. Companies, governments, and other organizations can raise funds by issuing and selling securities, such as stocks and bonds, directly to investors.

Answer 10

Primary Market

Question 11

known as equities, represent ownership in a company.

Answer 11

Stocks

Question 12

the process by which a privately held company becomes publicly traded by issuing and selling shares of its stock to the public for the first time.

Answer 12

IPO

Question 13

debt securities that represent a loan made by an investor to a
company or government.

Answer 13

BONDS

Question 14

Capital markets are made up of a variety of participants

Answer 14

Market Participants

Question 15

Capital markets are regulated by government agencies to ensure fair and efficient trading, and to protect investors.

Answer 15

Market Regulation:

Question 16

Companies, governments, and other organizations can raise capital by issuing and selling securities to the public. This process is known as an initial public offering (IPO) for stocks, or an issuance of bonds.

Answer 16

Issuance and Sale of Securities

Question 17

securities that derive their value from the price of an underlying asset, such as a stock or commodity.

Answer 17

Derivatives

Question 18

financial instruments that represent ownership in a company (stocks) or a debt owed by a company or government (bonds).

Answer 18

Securities

Question 19

company seeking to go public hires investment bankers to help it prepare for the IPO.

Answer 19

Preparation

Question 20

individual investors who buy and sell securities for their own
personal accounts.

Answer 20

Retail Investor

Question 21

debt securities that are issued by corporations or governments to raise funds. Investors

Answer 21

Bonds

Question 22

demand generated during the roadshow, the investment bankers set the final price for the stock. This is known as the offering price.

Answer 22

Pricing

Question 23

On the day of the IPO, the stock begins trading on a stock exchange, and investors can buy and sell the stock just like any other publicly traded security.

Answer 23

Trading

Question 24

The investment bankers allocate the available shares of stock to their clients, based on their level of interest.

Answer 24

Allocation

Question 25

firms that buy and sell securities on behalf of their clients, as well as for their own account.

Answer 25

Broker-Dealers

Question 26

Based on the demand generated during the roadshow, the investment bankers set the final price for the stock.

Answer 26

PRICING

Question 27

company embarks on a roadshow, during which its executives travel to major cities to meet with potential investors and promote the company and its stock.

Answer 27

ROADSHOW

Question 28

are large financial organizations, such as pension funds, mutual funds, and insurance companies, that buy and sell securities on behalf of their clients or to meet their own investment objectives

Answer 28

Institutional Investors

Question 29

Securities and Exchange Commission (SEC) in the United States, are government agencies that oversee and regulate the capital market to ensure that it operates in a fair and transparent manner.

Answer 29

Regulators

Question 30

individual investors who buy and sell securities for their own
personal accounts.

Answer 30

Retail Investor

Question 31

Capital markets are made up of a variety of participants,

Answer 31

Market Participants