What is the right answer.. offering, activity, remember, investment, first

Mechanic

A secondary market activity is...

Shelf offering or
An investment banker selling the governament security (like bills, notes, and bonds) to other?

Dont remember the first choice..

Thx

kasinkei

Good for u

chetan86

Aravinda Wrote:
-------------------------------------------------------
> A secondary market activity is...
>
> Shelf offering or
> An investment banker selling the governament
> security (like bills, notes, and bonds) to other?
>
>
> Dont remember the first choice..
>
> Thx


I would say an investment banker selling the government security is a secondary activity. If the government securities are already in possession of the investment banker, then they have already been sold into the open market. Once it is out of the hands of the originator, in this case, the U.S. government, every transaction thereafter is a secondary market activity.

FYI: A shelf offering consists of shares of stock that have yet to be sold by an investment bank. In other words, the investment bank who is underwriting the IPO keeps some shares "on a shelf" to sell into the market after the share price has gone up.

eagles_dare13

I went for shelf registration - I can't remember the alternatives or the question clearly enough, but my feeling was that as shelf registrations were held back pieces of rights issues of listed companies they were effectively secondary market securities.

An investment banker selling a government security may be a secondary activity - i.e not originating - but that doesn't necessarily make it a secondary MARKET activity.

Still, not comfortable with this one - I may well be wrong.

soddy1979

I said Investment bank too.... I believe Shelf Reg. is one of the features of a primary markets

Jolyn

I'm pretty sure I said the ibanker selling govt securities.

dmar

There were so many questions, which had an answer in "grey" area. I really don't understand that what was point of CFA institute in asking such ambigious questions

dotamasta

Can you put the question up pls..

soddy1979

I'm not sure, but shelf offering offers you to sell securities whenever you want to when needed (they are on the shelf basically), so this fits well.

...but in the exam I answered "Investment Banker selling Gov't securities" as i-bankers usually dont sell govt securities (the govt sells them itself).

...but, i-bankers are the biggest primary market makers, so Im not sure where this fits with selling govt securities, but u get the point.

confused? so am I.

eagles_dare13

Also found this:

"Shelf registration provides an institutionalized method to issue a secondary offer instantly. Once the shelf registration statement has been filed, the seller typically will receive calls from time to time from a variety of investment banking firms offering to buy securities at a given set of terms and price."

So, i guess shelf registration.