Which of the following is considered a primary market transaction?
A) A ﬁrm sells stock to the public for the ﬁrst time in an IPO.
B) An investor buys stock in Chrysler Canada from his buddy.
C) Chrysler Canada's stockholders sell some of their shares to an activist investor.
D) On September 25, 1995, 30.8 million shares of stock changed hands on the TSX.
E) Labatt's just announced what their upcoming quarterly dividend payment will be.

Question

Quizplus · Accepted Answer

A primary market transaction involves the issuance of new securities by a company and the sale of those securities to investors for the first time. An IPO (initial public offering) is an example of a primary market transaction. Choice B is a secondary market transaction, as the investor is purchasing stock from another individual rather than directly from the company. Choice C is also a secondary market transaction, as existing shareholders are selling their shares to another investor. Choice D is just an example of stock trading on the secondary market, and choice E is not a transaction at all but rather an announcement about dividends.

Which of the Following Is Considered a Primary Market Transaction