Question

Which of the following is an example of a primary market transaction? a. A bank sells a mortgage to another bank. b. An IPO. c. Dave Letterman buys Viacom stock from his Uncle Earl. d. None of the above.

Answer 1

Answer:

b. An IPO

Explanation:

The primary market transaction is the market where securities are created. An IPO which means initial public offer is an example of a primary market transaction.

The secondary market which is also known as the stock market is where securities that have been created are allowed to change ownership through sales and purchases.

All other options given (apart from IPO) are secondary market transactions.