Primary: The Security Is Born Here

2 questions on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Exam level

Which two Exchange Act of 1934 sections govern the secondary market, where existing securities trade among investors?

A. Sections 12 and 15 B. Sections 7 and 10 C. Section 23 alone D. Section 8(a) alone

How sure are you?

Sure Fairly sure Guessing

Correct: A. Exchange Act sections 12 and 15 govern the secondary market.

B. Sections 7 and 10 are Securities Act sections governing the primary market.

C. Section 23 governs registration-statement effectiveness, unrelated to ongoing trading.

D. Section 8(a) sets a registration statement's effective-date clock, an offerings topic, not the secondary market generally.

Unit: SIE outline 1.2.1

Question 2Harder

Two dealers trade an unlisted stock over the counter, a stock that has never been listed on any exchange. Is this the third market?

A. No; it is ordinary secondary-market OTC trading, since the security was never exchange-listed B. Yes; any OTC trade with a dealer is automatically the third market C. Yes, because a dealer is involved and the trade is off an exchange D. No; it is the fourth market, since it happened over the counter

How sure are you?

Sure Fairly sure Guessing

Correct: A. The third market requires the security to be exchange-listed in the first place. An unlisted stock traded OTC is ordinary secondary-market activity, not the third market.

B. A dealer alone is not enough; the listing requirement is what makes a trade the third market specifically.

C. Same error: off-exchange plus a dealer, without a listing, is plain secondary trading.

D. The fourth market requires the dealer to be absent; here two dealers are trading with each other.

Unit: SIE outline 1.2.1

Primary: The Security Is Born Here

Now answer