Day: February 3, 2025

The directors at Alex plc are considering raising long-term finance by issuing shares in the company.

They have been informed that the way to do this is ‘by accessing the market’ but they are not sure what this means.

A market where new securities are bought and sold for the first time is known as?

Select ONE answer:

1. A futures market
2. A secondary capital market
3. A primary capital market
4. A money market

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > The capital markets consist of primary markets and secondary markets. New securities are issued on primary capital markets whilst secondary capital markets allow investors to buy existing securities or sell securities that they hold. Money markets provide short term debt financing and investment. Futures markets provide standardised futures contracts to buy or sell a particular commodity or financial instrument at a pre-determined price in the future.
4. Not correct

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