Test 3 Flashcards
Where do existing securities previously issued in the primary market get bought and sold among investors?
Secondary market
What term is commonly used to refer to a marketplace where buyers and sellers trade stocks and other financial instruments?
Stock market or exchange
Where do securities get traded in a centralized and regulated environment with established rules and procedures?
Organized Stock Exchange
What term describes the practice of buying and selling financial instruments within the same trading day?
Day trading
What trading strategy involves making small profits from small price movements, often executing a large number of trades in a day?
Scalping
What role do financial markets play in determining the fair value of assets through the forces of supply and demand?
Price setting
Which functions of financial markets involve determining the worth of various financial instruments, such as stocks and bonds?
Asset valuation
What strategy involves exploiting price differences of the same asset in different markets to make a profit?
Arbitrage
When individuals or institutions allocate funds with the expectations of generating a return, which function of financial markets is being exercised?
Investing
What financial market function involves tools and strategies to mitigate potential losses and manage uncertainties?
Risk management
What financial instruments represent loans or borrowed funds that are typically paid back with interest over a specific period?
Debt instruments
Which financial instruments represent ownership in a company and provide shareholders with a claim on its assets and earnings?
Equity instruments
In which market are new securities initially issued allowing companies to raise capital directly from investors?
Primary market
