An example of an issue of a financial security in the primary market would be:

Question

Quizplus · Accepted Answer

Both options B (shares arising as a result of a dividend reinvestment plan) and C (shares arising from participating in a rights issue) are examples of financial securities in the primary market. In a dividend reinvestment plan, shareholders can choose to reinvest their dividends in more shares of the company, which are issued by the company in the primary market. Similarly, in a rights issue, existing shareholders are given the right to purchase additional shares in the company, which are also issued in the primary market. Option A (acquiring shares from an existing investor purchased on the ASX) is an example of a transaction that takes place in the secondary market, not the primary market.

An Example of an Issue of a Financial Security in the Primary