Which one of the following transactions would occur in the primary market?
A) The gifting of ABC Co. shares by a grandmother to her grandchildren.
B) A financial institution selling shares of OPQ stock to another financial institution.
C) An individual selling shares of JKL stock to an existing JKL shareholder.
D) A financial institution buying shares of LM stock from an LM executive.
E) KM Co. selling new shares of stock to a financial institution.

Question

Quizplus · Accepted Answer

In the primary market, securities are sold for the first time from issuers to investors. Option E, where KM Co. is selling new shares of stock to a financial institution, represents a primary market transaction because it involves the issuance of new shares directly from the company to investors.

Which One of the Following Transactions Would Occur in the Primary