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Financial Markets Quiz

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Questions and Answers

What is a financial market?

A market where physical goods are traded at high transaction costs

A market where physical goods are traded at low transaction costs

A market where financial securities are traded at low transaction costs (correct)

A market where financial securities are traded at high transaction costs

What is the primary purpose of financial markets?

To facilitate the trade of physical goods

To predict future changes in the stock market

To control risk

To raise finances (correct)

What are derivative products?

Physical products that are used to control risk or exploit risk

Physical products that are used to raise finances

Financial products that are used to control risk or exploit risk (correct)

Financial products that are used to raise finances

What is technical analysis?

The basis of attempting to predict future changes in the stock market Signup and view all the answers

What is volatility?

The scale of changes in price over some unit of time Signup and view all the answers

What is the difference between the primary market and the secondary market?

Primary market is where newly started companies issue shares to the public for the first time through IPO, while secondary market is where second hand securities are sold Signup and view all the answers

What is the purpose of capital markets?

To gain long-term funding to support expansion Signup and view all the answers

Who can borrow by issuing bonds?

Governments, municipalities and local authorities, and corporations Signup and view all the answers

What is the trading basis for currencies and bonds?

They are traded on a bilateral basis Signup and view all the answers

Study Notes

Overview of Financial Markets

A financial market is a market in which financial securities are traded at low transaction costs.
The term "market" is used for exchanges that facilitate the trade in financial securities.
Trading of currencies and bonds is largely on a bilateral basis, although some bonds trade on a stock exchange.
Financial markets refer to the markets that are used to raise finances.
Capital markets allow corporations to gain long-term funding to support expansion.
Without financial markets, borrowers would have difficulty finding lenders themselves.
Governments borrow by issuing bonds, and municipalities and local authorities may borrow in their own name.
Derivative products are financial products that are used to control risk or exploit risk.
Technical analysis is the basis of attempting to predict future changes in the stock market.
The scale of changes in price over some unit of time is called the volatility.
The primary market is where the newly started company issued shares to the public for the first time through IPO.
Secondary market is the market where the second hand securities are sold.

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Description

Test your knowledge of financial markets with this informative quiz! From the basics of trading financial securities to understanding the role of capital markets, this quiz covers it all. Learn the difference between primary and secondary markets, explore the use of derivative products, and discover the importance of technical analysis. With this quiz, you'll gain a better understanding of the financial world and the role it plays in our economy. Put your financial market knowledge to the test now!