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In which market are loans created?

  1. Federal market

  2. Primary market

  3. Secondary market

  4. Treasury market

The correct answer is: Primary market

The primary market is where loans are initially created and issued between a borrower and a lender. The federal market and treasury market mainly deal with government securities and bonds, not loans. The secondary market is where loans can be bought and sold after they have already been issued in the primary market. Therefore, the primary market is the most appropriate option for this question as it is the initial source of loan creation.