[Synchronous] Activity 2

What is the primary difference between the primary and secondary markets?

• The primary market involves trading existing securities, while the secondary market deals with newly issued securities.

• The primary market is where new stocks and bonds are issued for the first time, and the secondary market is where existing securities are traded among investors.

• The primary market focuses on commodities, while the secondary market focuses on derivatives.

• The primary market determines the prices of securities, while the secondary market provides liquidity.

Which of the following is an example of a primary market activity?

• Buying shares of BDO from another investor on the PSE.

• Participating in an Initial Public Offering (IPO) for a new company like San Miguel Corporation.

• Selling a government bond in the secondary market.

• Trading futures contracts on the Philippine Stock Exchange.

What distinguishes stocks from bonds?

• Stocks represent ownership in a company, while bonds are a form of debt where you lend money to the issuer.

• Stocks have lower risk compared to bonds, which are generally riskier.

• Bonds provide higher returns and dividends compared to stocks.

• Stocks and bonds are the same in terms of risk and return.

Which of the following best describes the role of financial markets?

• They only provide a platform for trading commodities.

• They channel savings into investments, determine prices, provide liquidity, and lower transaction costs.

• They exclusively offer investment opportunities in derivatives.

• They only facilitate the buying and selling of real estate.

Which market would you use to buy newly issued shares of a company?

• Secondary Market

• Bond Market

• Commodities Market

• Primary Market

How do financial markets provide liquidity?

• By setting fixed prices for securities.

• By allowing investors to easily buy and sell securities.

• By offering tax incentives for trading.

• By guaranteeing profits on all investments.