You recently sold 100 shares of your new company, XYZ Corporation, to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following statements best describes this transactionσ
A) this is an example of an exchange of physical assets.
B) this is an example of a primary market transaction.
C) this is an example of a direct transfer of capital.
D) this is an example of a money market transaction.
E) this is an example of a derivatives market transaction

Question

Quizplus · Accepted Answer

This is an example of a direct transfer of capital between two individuals, as the ownership of the shares was transferred from you to your brother in exchange for the payment of a check. It is not an exchange of physical assets, as the stock certificates are simply evidence of ownership, and it is not a primary market transaction because the shares were not being issued or sold by the company for the first time. It is not a money market transaction, as that refers to short-term debt securities, nor a derivatives market transaction, as there is no use of financial instruments to derive value from underlying assets.

You Recently Sold 100 Shares of Your New Company, XYZ