Chartered Alternative Investment Analyst Association (CAIA) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Chartered Alternative Investment Analyst examination with a comprehensive quiz featuring multiple-choice questions and in-depth explanations. Boost your knowledge and confidence with the right resources!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

Which market involves securities that are not listed on an exchange?

Primary market
Secondary market
Third market
Fourth market

The correct answer is: Fourth market

The fourth market refers specifically to transactions that occur directly between institutional investors, bypassing traditional exchanges. This market facilitates the trading of securities that are not listed on public exchanges and includes instruments such as large blocks of stock or other financial instruments that are traded over-the-counter (OTC). In this market, trades can be executed without the oversight and transaction costs associated with exchanges, allowing for more efficient direct trading between large entities. The other market definitions do not apply in the same way. The primary market involves the issuance of new securities directly from issuers to investors, primarily via initial public offerings (IPOs). The secondary market is where previously issued securities are bought and sold among investors, typically through exchanges. The third market refers to the trading of listed securities in the OTC market, which still involves securities that are publicly traded on exchanges but differs from the direct large-scale trades characteristic of the fourth market.