Financial Awareness - Risk, Stability & Emerging Finance
Which of the following statements correctly distinguishes the Primary Market from the Secondary Market in terms of capital flow?
Which of the following statements correctly distinguishes the Primary Market from the Secondary Market in terms of capital flow?
hard Q10 of 15
Step-by-Step Solution
Step 1: Understand capital flow in markets
In the Primary Market, investors provide funds directly to issuing companies by buying new securities.Step 2: Analyze capital flow in Secondary Market
In the Secondary Market, capital flows between investors trading existing securities; issuing companies do not receive funds.Step 3: Evaluate incorrect options
Capital does flow in both markets but in different directions; options stating no capital flow or reversed flows are incorrect.Final Answer:
In the Primary Market, capital flows from investors to issuing companies; in the Secondary Market, capital flows between investors → Option DQuick Check:
Primary: investors → company; Secondary: investors ↔ investors ✅
Quick Trick: Primary Market = fresh capital to company; Secondary Market = investor trading.
Common Mistakes:
- Confusing direction of capital flow between markets.
Master "Risk, Stability & Emerging Finance" in Financial Awareness
Start learning the concept with an interactive lesson.
Want More Practice?
15+ quiz questions · All difficulty levels · Free
Free Signup - Practice All QuestionsMore Financial Awareness Quizzes