Uniform Securities Agent State Law (Series 63) Practice Exam

Which of the following types of transactions is typically conducted in the secondary market?

1. Initial public offerings

2. Non-issuer transactions

3. Direct placements

4. Private placements

The correct answer is: Non-issuer transactions

The correct answer highlights non-issuer transactions as the types typically conducted in the secondary market. In the context of securities trading, the secondary market refers to the marketplace where previously issued securities are bought and sold among investors, rather than being issued by the company itself. Non-issuer transactions relate to trades involving securities that are not directly from the original issuer. This means that the buying and selling occur between two parties in the marketplace, which is characteristic of secondary market activities. Investors trade securities that have already been issued, such as stocks or bonds, allowing for liquidity and the establishment of a market price. In contrast, initial public offerings occur when a company sells its shares to the public for the first time, which is a primary market transaction, as the company is directly involved in the issuance. Direct placements and private placements also involve transactions where a company directly sells its securities, usually to a small group of investors, thus, these are also categorized under primary market transactions. Therefore, non-issuer transactions correctly represent the type of trading that predominantly takes place in the secondary market.