Practice Quiz

FINRA Series 6

Category - Series 6

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Which of the following statements about primary market transactions is true?
  1. A primary market transaction is defined as a transaction that is executed on either the NYSE or NASDAQ. Transactions that take place on ECNs are secondary market transactions.
  2. In a primary market transaction, the issuer of the security receives the proceeds from the sale of the security.
  3. A primary market transaction refers to the trading of stocks; a secondary market transaction is defined as a transaction that involves bonds.
  4. Both A and B are true statements.
Explanation
Answer: B - In a primary market transaction, the issuer of the security receives the proceeds from the sale of the security. A secondary market transaction involves the purchase and sale of a security between investors, and the seller of the security receives the proceeds from the sale. Both stocks and bonds are initially introduced to the market as primary market securities and are then traded in the secondary market.
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