When a stock transaction occurs in the secondary market, the company receives: Group of answer choices Nothing The dollar value of the transaction The dollar value of the transaction, less brokerage fees Only the par value of the common stock

Question

Medina

Business

5 December, 11:37

When a stock transaction occurs in the secondary market, the company receives: Group of answer choices Nothing The dollar value of the transaction The dollar value of the transaction, less brokerage fees Only the par value of the common stock

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Answers (1)

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Jonathan · Answer 1

The correct option is that the company receives nothing.

Explanation:

Secondary market stock transactions take place between investors who already hold the stock and the other one who is willing to buy the stock, the company whose stocks are being traded is not a party to the transactions, as a result, would receive nothing from such secondary market stock transactions.

The company would have receive cash if the it had issued shares to new investors for the first time through investment banks, which is initial public offer, or if shares were issued to existing stockholders, the rights issue