The primary market is where loans are ___________, the secondary market is where loans are ____________.

The primary market is where loans are ___________, the secondary market is where loans are ____________.

• A. Originated; Sold
• B. Sold; Originated
• C. Funded; Underwritten
• D. Insured; Guaranteed

Answer: (A)

The primary market is where loans are originated, meaning lenders work with borrowers to create and fund new loans. The secondary market is where those loans are sold to investors, often after they’re originated, so the lender can recycle capital and issue more loans. This distinction helps lenders manage liquidity and risk: originations happen with the borrower, while sales to the secondary market transfer ownership and allow for pooling or securitization. Why this fits the options: originated describes the creation of the loan, and sold describes transferring that loan to investors in the secondary market. The other pairings mix steps within origination (funded, underwritten) or refer to insurance/guarantee programs rather than market roles.

The primary market is where loans are originated, meaning lenders work with borrowers to create and fund new loans. The secondary market is where those loans are sold to investors, often after they’re originated, so the lender can recycle capital and issue more loans. This distinction helps lenders manage liquidity and risk: originations happen with the borrower, while sales to the secondary market transfer ownership and allow for pooling or securitization.

Why this fits the options: originated describes the creation of the loan, and sold describes transferring that loan to investors in the secondary market. The other pairings mix steps within origination (funded, underwritten) or refer to insurance/guarantee programs rather than market roles.