Delon, Chanel The financial market is a broad term used to describe a marketplace where financial instruments, such as stocks, bonds, and currencies, are traded. The financial market includes both primary markets, where new securities are issued and sold, and secondary markets, where existing securities are bought and sold among investors. Question 6 (2 points) Investment banks provide a means for the sale of stocks and bonds. ____stocks________ represent ownership of a corporation. _____bonds_______ are basically loans to a firm. Question 7 (2 points) What do companies do with the money they receive from the sale of stocks and bonds that they issue? Companies typically use the money they receive from the sale of stocks and bonds to invest in new projects, expand their businesses, repay debt, or pay dividends to shareholders. Question 8 (2 points) Explain one example of how the banking system or the financial market failed and caused economic collapse. One example of a banking system failure was the 2008 financial crisis, which was caused in part by the widespread issuance of subprime mortgages and the packaging of those mortgages into complex securities that were sold to investors. When housing prices began to decline, many borrowers were unable to repay their mortgages, and the resulting wave of foreclosures led to significant losses for banks and investors. This ultimately led to a credit crunch and a severe economic downturn, which had lasting effects on the global economy.
