Finance Week 2 Quiz

1. What is the primary function of the primary financial market? Select an option To enable initial issuance of securities To provide liquidity to investors To regulate market participants To facilitate trading of previously issued securities

Correct Answer: To enable initial issuance of securities

2. Which financial instrument derives its value from an underlying asset, index, or benchmark? Select an option Common stock Corporate bond Derivative Treasury bond

Correct Answer: Derivative

3. What type of security represents ownership stakes in corporations? Select an option Corporate bond Derivative Equity security Government bond

Correct Answer: Equity security

4. What investment strategy aims to balance risk and return by spreading investments across different asset classes? Select an option Market timing Sector rotation Diversification Stock picking

Correct Answer: Diversification

5. What regulatory body oversees market activities to ensure fair practices and investor protection? Select an option Federal Reserve Financial Conduct Authority (FCA) Securities and Exchange Commission (SEC) European Central Bank (ECB)

Correct Answer: Securities and Exchange Commission (SEC)