Canadian Securities Course (CSC) Level 1 Practice Exam

What are the individual financial markets that make up the capital markets?

1. Money markets

2. Currency markets

3. Bond markets

4. Stock markets

The correct answer is: Stock markets

The capital markets are primarily comprised of the bond markets and the stock markets, which facilitate the raising of funds and the trading of securities. Among these, the stock markets specifically deal with the buying and selling of equity securities, representing ownership in companies. The bond markets, on the other hand, involve debt instruments issued by corporations and governments to raise capital. While the money markets and currency markets are integral to the overall financial system, they do not form part of the capital markets. Money markets typically deal with short-term debt instruments and liquidity, while currency markets involve foreign exchange transactions. Therefore, in the context of identifying the components that comprise capital markets, stock markets represent a significant individual market focused on equity investment.