Question

Identify whether the following transactions are primary market or secondary market translations?

1) Primary
2) Secondary

Answer 1

Primary

Secondary

Step-by-step explanation:

Primary market transactions (option 1) involve the issuance of new securities, where companies raise capital by selling stocks or bonds directly to investors. This initial sale occurs through mechanisms such as initial public offerings (IPOs) or the issuance of new bonds. In the primary market, the funds raised go directly to the issuing company.

Secondary market transactions (option 2) involve the buying and selling of previously issued securities among investors, with no direct involvement or benefit to the issuing company. This market consists of exchanges where investors trade existing financial instruments, such as stock exchanges for equities and bond markets for debt securities. The secondary market provides liquidity and a platform for investors to trade securities after the initial issuance in the primary market.