Which of the following is a primary market transaction?
A) You sell 200 shares of IBM stock on the NYSE through your broker.
B) IBM issues 2,000,000 shares of new stock and sells them to the public through an investment banker.
C) You buy 200 shares of IBM stock from your brother. The trade is not made through a broker--you just give him cash and he gives you the stock.
D) One financial institution buys 200,000 shares of IBM stock from another institution. An investment banker arranges the transaction.
E) You invest $10,000 in a mutual fund, which then uses the money to buy $10,000 of IBM shares on the NYSE.

Question

Quizplus · Accepted Answer

In a primary market transaction, new securities are issued and sold for the first time. In option B, IBM is issuing new shares and selling them to the public, which is a primary market activity.

Which of the Following Is a Primary Market Transaction