Which of the following statements is CORRECT?
A) The NYSE does not exist as a physical location.Rather it represents a loose collection of dealers who trade stock electronically.
B) An example of a primary market transaction would be your uncle transferring 100 shares of Walmart stock to you as a birthday gift.
C) Capital market instruments include both long-term debt and common stocks.
D) If your uncle in New York sold 100 shares of Microsoft through his broker to an investor in Los Angeles,this would be a primary market transaction.
E) While the two frequently perform similar functions,investment banks generally specialize in lending money,whereas commercial banks generally help companies raise large blocks of capital from investors.

Question

Quizplus · Accepted Answer

Capital market instruments refer to any security that represents a long-term investment. This includes long-term debt, such as bonds, and ownership shares of common stocks. A primary market transaction typically involves the issuing of new securities to raise capital, whereas a secondary market transaction involves the buying and selling of existing securities. Therefore, choice B is incorrect, as it describes a secondary market transaction between two individuals, rather than a primary market transaction. Choices A, D, and E contain incorrect statements.

Which of the Following Statements Is CORRECT