Which of the following transactions takes place in both the secondary market and capital market?

Question

BlackTom AI · Accepted Answer

The provided data for this question is incomplete because the list of answer options is missing. Without the full set of choices, I cannot evaluate each option individually.

However, I can analyze the lone statement given in the answer field and relate it to the core concept of markets involved:
- The statement: "D. Unisuper purchased 5 million Westpac outstanding shares in the Australian Securities Exchange to diversify its investment portfolio." This describes a transaction where an investor buys existing shares on a public exchange.
- This type of trade occurs in the secondary market, where existing securities are bought and sold between investors, as opposed to the primary market, where new securities are issued by issuers.
- In terms of market scope, the capital market comprises both primary and secondary markets for equity and debt instruments. Therefore, a transaction that occurs on a stock exchange (secondary market) is indeed part of the broader capital market framework since the capital market covers all long-term securities trading, including secondary trading.

Why this matters: understanding the distinction helps determine which options could be correct. A statement describing purchasing existing shares on a recognized exchange would typically be categorized as a secondary market activity, yet it also fits within the broader capital market context because the capital market encompasses activities in both primary and secondary markets for equities.

Why other options (if they were present) might be wrong: options describing primary market activities (like initial public offerings or new share issues) would not occur in the secondary market; options describing non-equity markets or day-to-day banking operations would fall outside the standard definitions of secondary or capital markets. Misconceptions often arise by confusing the scope of the capital market with only one component (e.g., thinking capital market excludes secondary trading), or by mislabeling secondary market transactions as primary.

In summary, the described transaction is characteristic of the secondary market, and by virtue of being part of the broader market framework for long-term securities, it also sits within the capital market. If additional options were provided, they would need to be weighed against these definitions to determine which statement truly applies to both markets.

Which of the following transactions takes place in both the secondary market and capital market?

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