Mastering Cash Equities
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Questions and Answers

Which market refers to a market where already issued securities and financial instruments are traded?

  • Secondary market (correct)
  • Exchange
  • Primary market
  • OTC market

    • What is the main difference between an exchange and the OTC market?

  • OTC market and exchange are both decentralized and unorganized.
  • OTC market is decentralized and unorganized, while the exchange is a formal stock exchange with defined rules. (correct)
  • OTC market is a formal stock exchange with defined rules, while the exchange is a decentralized and unorganized.
  • OTC market is a formal stock exchange with defined rules, while the exchange is decentralized and unorganized.

    • What does OTC stand for?

  • Over the Telephone Counter
  • Over the Trade Counter
  • Over the Table Counter
  • Over the Counter (correct)

    • What is the role of an exchange in trading securities?

    <p>To ensure compliance with rules and regulations</p> Signup and view all the answers

    Which market is under the supervision of the exchange?

    <p>Secondary market</p> Signup and view all the answers

    Study Notes

    Financial Markets Overview

    • The secondary market involves trading already issued securities and financial instruments.
    • Investors buy and sell securities that have previously been distributed in the primary market.

    Exchange vs. OTC Market

    • The main difference between an exchange and the over-the-counter (OTC) market lies in regulation and structure.
    • Exchanges are formal, regulated venues where transactions are executed, while OTC markets are decentralized and less regulated.
    • Exchanges usually provide more liquidity and transparency compared to OTC markets.

    Terminology

    • OTC stands for "Over-The-Counter," referring to the trading of financial instruments directly between parties without a centralized exchange.

    Role of an Exchange

    • Exchanges facilitate the trading of securities by providing a platform for buyers and sellers to connect.
    • They help ensure fair pricing, enhance liquidity, and provide regulatory oversight, enhancing investor confidence.

    Market Regulation

    • The exchange supervises the activities within its trading platform, ensuring compliance with related regulations.
    • Securities traded on exchanges are subject to stricter rules compared to those traded in the OTC market.

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    Description

    Test your knowledge on cash equities, including the different types of equity shares, primary and secondary markets, the IPO process in the Indian market, various stock exchanges and financial centers worldwide, trade economics for the equity market, and the difference between OTC and exchange markets.

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