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4 October, 04:51

Which one of the following is a primary market transaction?

a. sale of currently outstanding stock by a dealer to an individual investor

b. sale of a new share of stock to an individual investor

c. stock ownership transfer from one shareholder to another shareholder

d. gift of stock from one shareholder to another shareholder

e. gift of stock by a shareholder to a family memberber

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Answers (2)
  1. 4 October, 04:55
    0
    The correct answer is letter "B": sale of a new share of stock to an individual investor.

    Explanation:

    Corporations and governments fund their activities by selling stocks or bonds that are bought directly by individual investors from the issuing company or government entity. This is considered the primary market which gives investors their first opportunity to buy new securities.
  2. 4 October, 04:58
    0
    b. sale of a new share of stock to an individual investor

    Explanation:

    The primary market is where new stocks are created. it is the platform for investors to purchase stocks of an entity that goes public for the first time.

    Hence the initial public offer otherwise known as IPO is a good example of a primary market transaction.

    As such sale of a new share of stock to an individual investor is a primary market transaction
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