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Relevant to the SIE.
D. Both Henry’s sale to James and James’s sale to Carrie are secondary market transactions
Answer: D. When an investor buys shares in an IPO from the issuer, the purchase is a primary market transaction. After that, whenever sales of the security are traded from investor to investor, and not from the issuer to an investor, the sales take place in the secondary market. Thus, while Henry’s initial purchase is a primary market transaction, his sale to James and then James’ sale to Carrie are both secondary market transactions.