Which of the following is a primary market transaction?
A) You sell 200 shares of IBM stock on the NYSE through your broker.
B) IBM issues 2,000,000 shares of new stock and sells them to the
Public through an investment banker.
C) You buy 200 shares of IBM stock from your brother. The trade is not made through a broker--you just give him cash and he gives you
The stock.
D) One financial institution buys 200,000 shares of IBM 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 IBM shares on the NYSE.

Question

Quizplus · Accepted Answer

A primary market transaction involves the issuance of new securities by the company and selling them to the public. Option B describes exactly that as IBM issues 2,000,000 shares of new stock and sells them to the public through an investment banker. The other options are all secondary market transactions where already issued securities are being bought or sold between investors or institutions.

Which of the Following Is a Primary Market Transaction