Company A had its first day as a publicly traded company on October 20, 2011. The stock closed at a price of $17 per share, with 8,000,000 shares trading on this first day. There are 32,000,000 shares of common stock outstanding after this offering. What type of transaction took place on October 20, 2011 and what is the company's market capitalization at the end of the day?
A) Primary market, $136,000,000
B) Primary market, $544,000,000
C) Secondary market, $136,000,000
D) Secondary market, $544,000,000

Question

Quizplus · Accepted Answer

The transaction was a primary market transaction because it was the first day the company was publicly traded, indicating an initial public offering (IPO). The market capitalization is calculated by multiplying the total number of shares outstanding (32,000,000) by the closing price per share ($17), resulting in $544,000,000.

Company a Had Its First Day as a Publicly Traded