Without a Secondary Market, Issuers Would Be Unable to ________

question 1

Multiple Choice

Without a secondary market, issuers would be unable to ________, or they would have to pay a higher rate of return, as investors would ________ in compensation for expected illiquidity in the securities.

• A) sell new securities; increase the discount rate
• B) sell new securities; decrease the discount rate
• C) buy new securities; decrease the price
• D) sell new securities; increase the price

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Definitions:

Construct Validity

The extent to which a test or instrument accurately measures the theoretical construct it is intended to assess.

Reliability

The reliability and steadiness of outcomes produced by a measurement tool across multiple instances.

Aggregation

The process of combining multiple pieces or data points together to form a whole or summary measure.

Incremental Validation

A process of progressively verifying the steps or components of a model, system, or theory to ensure its accuracy or validity at each stage.