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10 June, 17:53

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

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  1. 10 June, 18:18
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    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
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