In an IPO on May 1,2012,Timmy Hilfigure purchased 1,000 shares of Abner Crummie,Inc.for $5,000.On April 30,2018,Timmy Hilfigure sold the 1,000 shares for $8,000 to Ralph Loring.What is the effect of the sale on April 30,2018?

Question

Quizplus · Accepted Answer

When a company issues stock to the public,the transaction is between the issuing corporation and an investor.After this initial stock issuance,an investor can exchange shares for cash provided by other investors without directly affecting the corporation.These transactions involve only the owners of the company and not the corporation itself.

In an IPO on May 1,2012,Timmy Hilfigure Purchased 1,000 Shares