A corporation acquires new funds only when its securities are sold ________.
A)in the primary market by an investment bank
B)in the primary market by a stock exchange broker
C)in the secondary market by a securities dealer
D)in the secondary market by a commercial bank

Question

Quizplus · Accepted Answer

In the primary market, securities are sold for the first time, and the funds obtained from the sale go directly to the corporation. Investment banks typically underwrite and sell these securities on behalf of the corporation. In contrast, the secondary market is where already issued securities are traded among investors, and the funds from the sale go to the selling investor rather than the corporation. The other answer choices are therefore incorrect as they involve sales of securities in the secondary market, rather than the primary market.

A Corporation Acquires New Funds Only When Its Securities Are