1.When bonds are sold in a bought deal, the transaction takes place on the:

A)    primary market.

B)    secondary market.

C)    tertiary market.

D)    over-the-counter market.

2.Which of the following does NOT represent a secondary market offering? When bonds are sold:

A)    on an exchange.

B)    in an over-the-counter dealer market.

C)    on an electronic trading network.

D)    in a Rule 144A offering.

3.Which of the following does NOT represent a primary market offering? When bonds are sold:

A)    from a dealer’s inventory.

B)    on a best-efforts basis.

C)    in a private placement.

D)    in a negotiated offering.

答案和详解如下：

1.When bonds are sold in a bought deal, the transaction takes place on the:

A)    primary market.

B)    secondary market.

C)    tertiary market.

D)    over-the-counter market.

The correct answer was A)

When bonds are sold in a bought deal, the transaction takes place on the primary markets. In a bought deal, the investment banker buys the issue of bonds from the issuer and then resells them (i.e. they have underwritten the offer and the arrangement is termed a firm commitment). Bonds are sold in secondary markets after being sold the first time (after they have been issued in the primary market). The term over-the-counter does not apply. Tertiary market is a fabricated term.

2.Which of the following does NOT represent a secondary market offering? When bonds are sold:

A)    on an exchange.

B)    in an over-the-counter dealer market.

C)    on an electronic trading network.

D)    in a Rule 144A offering.

The correct answer was D)

When bonds are sold in a Rule 144A offering, they are sold privately to a small number of investors or institutions. This offering does not require registration with the SEC and this is valuable to the issuer. The investor will require a slightly higher yield because the bonds cannot be resold to the public unless they are registered with the SEC. The other sales transactions in the responses represent secondary market offerings.

3.Which of the following does NOT represent a primary market offering? When bonds are sold:

A)    from a dealer’s inventory.

B)    on a best-efforts basis.

C)    in a private placement.

D)    in a negotiated offering.

The correct answer was A)

When bonds are sold from a dealer’s inventory, the bonds have already been sold once and the transaction takes place on the secondary market. The other transactions in the responses take place in the primary market. When bonds are sold on a best-efforts basis, the investment banker does not take ownership of the securities and agrees to sell all she can. The price at which the bonds are offered is negotiated between the issuer and the investment bank (i.e. a negotiated offering). In a private placement, the bonds are sold privately to a small number of investors.