What is considered a primary market transaction?

Question

Quizplus · Accepted Answer

A primary market transaction involves a corporation selling new securities, such as stocks, bonds or options, to investors in exchange for cash or other forms of payment. This is the process of issuing securities for the first time, therefore it is known as a primary market transaction. Therefore, option A is the correct choice as it involves the sale of securities from the corporation to investors.

Option B is incorrect as it is a secondary market transaction, which means that it takes place between two investors, and does not involve the issuing of new securities.

Option C is incorrect as it is related to the dividend policy of a company, which does not involve the issuance or sale of securities.

Option D is completely unrelated as it involves a company making a bank deposit, and is not related to primary market transactions.

What Is Considered a Primary Market Transaction