Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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Which of the following is a service provided by capital markets?

Market analysis reports
New share issues
Tax accounting services
Customer relationship management

The correct answer is: New share issues

Capital markets play a crucial role in the economy by facilitating the raising of capital through the issuance of various securities. One of their primary services is new share issues, which are often referred to as initial public offerings (IPOs). During an IPO, a company offers its shares to the public for the first time to raise funds for expansion, debt repayment, or other strategic initiatives. This process not only provides companies with the necessary capital but also offers investment opportunities to the public. The other options offered represent services that do not directly align with the core functions of capital markets. Market analysis reports, while relevant to investors and analysts, are not intrinsic to the capital market's purpose of raising funds. Tax accounting services fall under the realm of accounting and auditing, and customer relationship management pertains to marketing and sales strategies rather than capital market activities. Therefore, the service of new share issues stands out as a primary function of capital markets.