Which of the following is a characteristic of secondary markets for common stock?
A)only low-priced shares are traded in these markets.
B)only high-risk shares are traded in these markets.
C)secondary markets are where corporations borrow funds.
D)secondary-market trades do not provide funds for corporations whose stock is traded.

Question

Quizplus · Accepted Answer

Secondary-market trades involve the buying and selling of existing shares of stock and do not provide funds for the issuing corporation. The prices of these trades are determined by supply and demand and reflect the overall value of the company. The price of the shares on the secondary market depends on the performance of the issuing corporation, the economic conditions, and investor sentiment. The types of shares traded in secondary markets are not limited to low-priced or high-risk shares but encompass all publicly traded shares.

Which of the Following Is a Characteristic of Secondary Markets