Which of the following is an example of both a capital market and a primary market transaction?

A. Ford Motor Company sells a new issue of common stock to raise funds through a public offering.

B. The U. S. Government sells 3minusmonth Treasury bills.

C. No transactions occur in both primary and capital markets at the same time.

D. Microsoft common stock owned by an individual investor is sold to another investor.

The correct option which is an example of both a capital market and primary market is option A) Ford motors sells a new issue of common stock to raise funds through a public offering.

Explanation:

Primary markets are those markets where a company issues new securities for the first time on a exchange, so it won't be wrong to say that primary market is the place where securities are created and these new securities are available to public, government, other institutions to invest in. A primary example of this market is IPO, which is initial public offering.

Capital market can be defined as those markets which are composed of both primary and secondary market, and this market is the venue where savings and investments are interchanged between the the ones who have capital and the ones who are in need of capital.

So when Ford motors sells new shares of common stock through public offering, then it is definitely an example of primary market and if it is a example of primary market, then it is obviously an example of capital market, because capital market consists of both primary and secondary market.