21. A bond with a higher credit rating generally implies:
a. Higher risk of default
b. Lower interest rate
c. Shorter maturity period
d. Higher yield potential
22. Which of the following is an example of a primary market transaction?
a. Buying shares of a company from another investor
b. Purchasing government bonds in the secondary market
c. Participating in an initial public offering (IPO)
d. Trading options contracts on a stock exchange
23. The process of converting private company shares into publicly traded shares is called:
a. Stock dilution
b. Reverse merger
c. Initial public offering (IPO)
d. Secondary offering
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24. Which entity is responsible for regulating and overseeing capital markets in the United States?
a. Securities and Exchange Commission (SEC)
b. Federal Reserve System (Fed)
c. Financial Industry Regulatory Authority (FINRA)
d. Commodity Futures Trading Commission (CFTC)
25. What is the role of credit rating agencies in debt markets?
a. Determining the interest rates on loans and bonds
b. Assessing the creditworthiness of borrowers and issuers
c. Facilitating the trading of government securities
d. Regulating the issuance of corporate bonds
