Which of the following is a primary market transaction?
A) You sell 200 shares of Johnson & Johnson stock on the NYSE through your broker.
B) Johnson & Johnson issues 2,000,000 shares of new stock and sells them to the public through an investment banker.
C) You buy 200 shares of Johnson & Johnson stock from your younger brother.You just give him cash and he gives you the stock-the trade is not made through a broker.
D) One financial institution buys 200,000 shares of Johnson & Johnson stock from another institution.An investment banker arranges the transaction.
E) You invest $10,000 in a mutual fund, which then uses the money to buy $10,000 of Johnson & Johnson shares on the NYSE.

Question

Which of the following is a primary market transaction?
A)  You sell 200 shares of Johnson & Johnson stock on the NYSE through your broker.
B)  Johnson & Johnson issues 2,000,000 shares of new stock and sells them to the public through an investment banker.
C)  You buy 200 shares of Johnson & Johnson stock from your younger brother.You just give him cash and he gives you the stock-the trade is not made through a broker.
D)  One financial institution buys 200,000 shares of Johnson & Johnson stock from another institution.An investment banker arranges the transaction.
E) You invest $10,000 in a mutual fund, which then uses the money to buy $10,000 of Johnson & Johnson shares on the NYSE.

Quizplus · Accepted Answer

A primary market transaction involves the sale of new securities by the issuing company directly to the public through an investment banker. Option B describes this type of transaction. The other options describe secondary market transactions where the securities are bought and sold between investors.

Which of the Following Is a Primary Market Transaction