Canadian Securities Course (CSC) Level 1 Practice Exam

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What is the purpose of secondary markets?

Issuing new securities
Providing loans
Trading existing securities
Investing in startups

The correct answer is: Trading existing securities

The purpose of secondary markets is to facilitate the trading of existing securities. Secondary markets provide investors with the opportunity to buy and sell securities that were previously issued in the primary market. These transactions do not involve the issuing company directly, but rather involve investors trading securities amongst themselves. This liquidity and ability to buy and sell existing securities freely make secondary markets important for investors to manage their portfolios and react to market conditions.