If investor Jones buys a share of stock in the ABC Corporation from investor Smith, the ABC Corporation automatically receives a fixed percentage of the selling price.

Question

Quizplus · Accepted Answer

When investors buy and sell shares of stock from each other, the transactions occur on the secondary market, meaning the money exchanged goes directly to the other investor, not the company issuing the stock. The only time a company receives money from the sale of its own stock is during an initial public offering (IPO) or if the company issues more shares of stock in a secondary offering.

If Investor Jones Buys a Share of Stock in the ABC