Question

Which of the following occur in the primary market? a. Trades are executed on the largest exchanges (EX: NYSE, NASDAQ) b. The primary trades are in stocks alone c. New securities are placed for sale d. They are the first markets available for investment and also have the lowest cost structure

Answer 1

The correct event that occurs in the primary market is the placement of new securities for sale. This includes a variety of financial instruments, not just stocks, differentiating the primary market from the secondary market where existing securities are traded.

Step-by-step explanation:

Among the options provided, the correct event that occurs in the primary market is c. New securities are placed for sale. The primary market is the financial market where new securities, such as stocks and bonds, are issued and sold to investors for the first time. This contrasts with the secondary market, where existing securities are traded among investors.

Option a is incorrect as trades on the largest exchanges like the NYSE (New York Stock Exchange) and NASDAQ can occur in both primary and secondary markets, but significant activity on these exchanges is typically associated with the secondary market. Option b is incorrect because the primary market encompasses a variety of financial instruments, not just stocks. Option d, which suggests that the primary markets are the first available for investment and have the lowest cost structure, is vague and not strictly accurate.

Answer 2

The answer of the given statement that "the following occur in the primary market" is c. New securities are placed for sale.

Step-by-step explanation:

The primary market is where new securities, such as stocks and bonds, are issued and first offered for sale to the public. This is the market where companies raise capital by selling their securities directly to investors. The options a, b, and d do not accurately describe activities in the primary market.

Option a is incorrect because the primary market doesn't necessarily involve trading on exchanges; instead, it focuses on the initial issuance of securities. Option b is incorrect because the primary market involves various types of securities, not just stocks. Option d is incorrect because the cost structure in the primary market can vary and is not necessarily the lowest.

In summary, the correct statement is that c. new securities are placed for sale in the primary market, making it the initial point of issuance for securities.