Uniform Securities Agent State Law (Series 63) Practice Exam

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What does a non-issuer transaction represent?

A transaction in the primary market
A purchase of securities from the issuer
A secondary market trade
A trade made in compliance with SEC regulation

The correct answer is: A secondary market trade

A non-issuer transaction refers specifically to trades that occur in the secondary market, where securities are sold between parties other than the issuing company. In this context, the seller is not the issuer of the securities, which distinguishes it from transactions involving the sale of new issues (primary market transactions) or sales directly from the issuer (like initial public offerings). Understanding non-issuer transactions is essential since they often involve existing securities and are regulated differently compared to primary market transactions. While the choices might present other elements of trading securities, option C accurately captures the essence of non-issuer transactions, focusing on the secondary market where previously issued securities are bought and sold. The other options highlight different aspects of securities trading but do not align with the definition of a non-issuer transaction. For instance, transactions in the primary market involve new securities being issued, and a purchase from the issuer would directly contradict the nature of a non-issuer transaction.