Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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What is the new issue market also known as?

Secondary market
Capital market
Primary market
Fixed income market

The correct answer is: Primary market

The new issue market is commonly referred to as the primary market. This market is where new securities are created and offered to investors for the first time. In the primary market, companies raise capital by issuing stocks or bonds directly to investors. When these securities are sold, the issuer receives the proceeds from the sale, which can then be used for various purposes such as funding operations, expanding the business, or other investment needs. In contrast, the secondary market is where previously issued securities are traded among investors. The capital market encompasses both primary and secondary markets where securities are bought and sold, but it is not exclusively the place for new issues. The fixed income market typically refers to the market for debt securities, such as bonds, which can include both new issues and existing securities, thus also not specifically designating the primary market. Understanding the distinction between these markets is crucial in the investment sector, particularly for professionals dealing with securities and investment products.