Question23 An investor sold 1,000 shares of a firm’s stock on the New York Stock Exchange. This transaction must have: A. taken place in the primary market. B. occurred in a dealer market. C. occurred in the secondary market. D. involved a proxy. E. involved a private placement. ResetMaximum marks: 1 Flag question undefined

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BlackTom AI · Accepted Answer

To analyze where a transaction like this occurs, consider the purpose of each market and the nature of stock trades.
Option A: 'taken place in the primary market.' The primary market is where new issues are sold by the company to investors (IPOs, follow-ons). A sale of already issued shares by an investor does not involve the issuer and thus is not a primary-market transaction.
Option B: 'occurred in a dealer market.' A dealer market refers to trading venues where dealers hold inventories and trade with investors, often via over-the-counter networks. While secondary-market trades can take place in dealer-like environments, the specific setting here is the stock exchange, which facilitates exchange-type trading rather than a pure dealer-mediated quote-and-commit model.
Option C: 'occurred in the secondary market.' This is the correct framing: once shares are issued, trades between investors (buyers and sellers) occur in the secondary market, such as on the New York Stock Exchange, rather than in the original issuance market.
Option D: 'involved a proxy.' A proxy relates to voting rights and representation, not to the execution of a stock trade. It has no bearing on whether the sale occurred in the primary or secondary market.
Option E: 'involved a private placement.' Private placements are private sales of securities to select investors and do not describe a typical exchange-traded sale on a public exchange like the NYSE; this option mischaracterizes the transaction type.
In summary, the sale of already outstanding shares on a public exchange is characteristic of transactions in the secondary market, not the primary market, not a dealer-market-only transaction, not about proxies, and not a private placement. The key distinction hinges on whether the stock being traded is newly issued or already outstanding, with secondary-market trades involving the latter.

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