When a corporation uses an initial public offering to raise capital, the stock is sold in the
A) primary market.
B) secondary market.
C) unsecured financing market.
D) securities exchange.
E) over-the-counter market.

Question

Quizplus · Accepted Answer

When a corporation uses an initial public offering (IPO) to raise capital, the stock is sold for the first time in the primary market. This is where the corporation issues and sells its stock to the public, and the proceeds from the sale go directly to the corporation. The secondary market is where previously issued shares of stock are bought and sold between investors, and the unsecured financing market and over-the-counter market are not directly related to the sale of stock through an IPO. The securities exchange refers to the marketplace where securities like stocks are bought and sold, but it is not specific enough to be the best answer.

When a Corporation Uses an Initial Public Offering to Raise