Question

A company borrows $100,000 from a bank; this is part of the: a. Secondary debt market b. Primary debt market c. Secondary equity market d. Primary equity market

Answer 1

Answer:

The answer is B. Primary Debt Market

Explanation:

Primary Debt Market is a type of market in which participants issue/obtain loan(bonds, notes, bills etc.)directly from a company(bank or lender).

The money is directly from the bank to the debtor(the company that is borrowing money).

Option B is incorrect because secondary debt market is from hand to hand i.e from debtor to debtor.

For example, Mr A. obtains a loan of $1000 dollar from a bank. This is primarily debt market. And afterwards Mr A. sells this particular loan to Mr B. This is secondary debt market because it is not directly from the bank.

Option C and D are incorrect because this transaction is a debt transaction and not an equity transaction