Which of the following is an example of both a capital market and a secondary market transaction?

Question

BlackTom AI · Accepted Answer

Equities (common stock) are capital-market instruments because they represent long-term claims and are used to raise long-term finance; a secondary market transaction is any trade of previously issued securities between investors (after the initial issuance). Combining those definitions: a trade of an existing equity on an exchange is both a capital-market and a secondary-market transaction.

Step-by-step reasoning:
1. Define the markets:
   - Capital markets deal with long-term securities (equities and long-term debt).
   - Money markets deal with short-term debt (maturities typically under one year).
   - Primary market = initial issuance of a security (proceeds go to the issuer).
   - Secondary market = trading of issued securities among investors (issuer does not receive proceeds).
2. Evaluate each option against these definitions:
   - (a) Commercial paper is a short-term instrument (money market), not a capital-market instrument. So (a) is incorrect.
   - (b) A mutual fund buying shares in an IPO is buying in the primary market. Although shares are capital-market instruments, the transaction is primary (not secondary). So (b) is incorrect.
   - (c) ARK Invest buying Tesla shares on the Nasdaq: Tesla shares are equity (capital market), and buying them on Nasdaq means purchasing existing shares on a stock exchange (a secondary market trade). This meets both criteria.
   - (d) A 90-day negotiable certificate of deposit is a short-term money-market instrument; additionally, issuance is a primary-market action. So (d) is incorrect.
3. No numerical calculations are needed; the classification logic alone determines the correct choice.

Why the correct answer is correct:
- Tesla shares are equities (capital market).
- Nasdaq is a secondary market where previously issued shares are traded among investors.
- Thus ARK Invest’s purchase on Nasdaq is both a capital-market transaction (equities) and a secondary-market transaction (exchange trade of existing securities).

Other options fail because they are either money-market instruments or primary-market transactions. Therefore the correct answer is: ARK Invest increased its holdings of high-tech companies by purchasing more Tesla shares on the Nasdaq Stock Exchange. This matches the provided answer.

Which of the following is an example of both a capital market and a secondary market transaction?单项选择题

类似问题

IBM is a listed firm and its previously issued stocks are traded on NYSE. A sale by IBM of new stock to the public would be a(n)

Question at position 1 Which best describes the main purpose of capital markets?To manage the supply of cash in the economyTo set government interest ratesTo move money from savers to borrowers for long-term investmentTo guarantee profit to all investors

Property markets are where valuations are determined. Valuations require as inputs: (1) cash flows, (2) a required rate of return. In which markets are those inputs determined?

Dissatisfied capital market stakeholders may: