A corporation sells newly issued common shares to investors in an underwritten offering. In which market does this transaction occur?
A. Secondary market
B. Primary market
C. Third market
D. Auction market
Source: SEC-PRIMARY-SECONDARY -- Primary Market glossary entry, sentence defining issuer sales of new stocks and bonds
Why can an active secondary market make a newly issued security more attractive to investors?
A. It guarantees that the security cannot decline
B. It lets investors sell existing holdings more readily without requiring the issuer to redeem them
C. It requires the issuer to repurchase every order
D. It eliminates credit and market risk
Source: SEC-PRIMARY-SECONDARY -- Primary Market glossary entry contrasting issuance with subsequent investor-to-investor market trading
A securities firm executes a customer's order as agent and receives a commission. In what capacity is the firm acting?
A. Broker
B. Issuer
C. Transfer agent
D. Clearing corporation
Source: SEC-MARKET-PARTICIPANTS -- Market Participants heading, Broker-dealers subsection describing broker agency and dealer principal functions
A firm sells municipal bonds from its own inventory to a customer and includes a markup. How is the firm acting?
A. As an investment adviser charging an advisory fee
B. As a broker earning an agency commission
C. As a dealer acting as principal
D. As a transfer agent recording ownership
Source: SEC-MARKET-PARTICIPANTS -- Market Participants heading, Broker-dealers subsection distinguishing dealer principal trades from broker agency trades
After a shareholder sells certificated stock, which market participant normally updates the issuer's ownership records and cancels and issues certificates when required?
A. Transfer agent
B. Market maker
C. Investment adviser
D. Underwriter
Source: SEC-MARKET-PARTICIPANTS -- Market Participants heading, Transfer agents subsection describing recordkeeping and certificate functions
