1. Directions

You will read passages on the topic and then answer questions about them. You may find vocabulary at the end of the test. Read the questions carefully before choosing the correct answers.

2. Questions of the test

Question 1. What is the primary market?
A) The sale of new securities
B) The trading of securities that have already been issued
C) The buying and selling of shares of publicly traded companies
D) The buying and selling of debt securities, such as bonds and notes

Question 2. What is the secondary market?
A) The sale of new securities
B) The trading of securities that have already been issued
C) The buying and selling of shares of publicly traded companies
D) The buying and selling of debt securities, such as bonds and notes

Question 3. What is the stock market?
A) A market for buying and selling new securities
B) A market for trading securities that have already been issued
C) A market for buying and selling shares of publicly traded companies
D) A market for buying and selling debt securities, such as bonds and notes

Question 4. What is the bond market?
A) A market for buying and selling new securities
B) A market for trading securities that have already been issued
C) A market for buying and selling shares of publicly traded companies
D) A market for buying and selling debt securities, such as bonds and notes

Question 5. What is one risk associated with capital markets?
A) The allocation of capital may be inefficient
B) The value of securities may fluctuate based on economic conditions, company performance, and market trends
C) Investors may not earn returns on their investments
D) Companies and governments may have difficulty raising capital