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

Question

BlackTom AI · Accepted Answer

Let’s break down what each option represents and where these activities occur in financial markets.
Option A posits Westpac selling a Treasury note with a face value to ANZ. This is a primary market transaction, since it involves issuing new debt securities to investors. It does not describe a trading of existing securities in the market, so it does not illustrate a secondary-market activity.
Option B describes Monash Co. issuing a 3-month commercial paper. This is clearly a primary market activity: the company issuing new short-term debt to investors to raise funds. There is no exchange of existing securities between investors in the secondary market here.
Option C states that Unisuper purchased 5 million Westpac outstanding shares on the Australian Securities Exchange to diversify its portfolio. Here we have trading of already issued shares on a public exchange, which is quintessentially a secondary-market activity. Since the stock exchange is a component of the capital markets, this activity also sits within the broader capital markets framework. This option captures a transaction that occurs in the secondary market and is inherently part of the capital markets.
Option D mentions NTT Mobile Communication Network hiring banks to coordinate an Initial Public Offering to raise capital. An IPO is a classic primary-market transaction where new shares are issued to investors to raise fresh capital for the company. It does not involve trading of existing securities in the secondary market.
In summary, options A, B, and D describe primary-market activities or distinct primary-market processes, while option C describes a secondary-market trade (which is also encompassed within the capital markets). Therefore, option C is the example that takes place in both the secondary market and the capital markets.

MCD2170 - T1 - 2025 Week 1 Post-Class Homework

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

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