IBM creates and sells additional stock to the investment banker Morgan Stanley. Morgan Stanley then resells the issue to the U.S. public. This transaction is an example of a(n)
A)primary market transaction.
B)asset transformation by Morgan Stanley.
C)money market transaction.
D)foreign exchange transaction.
E)forward transaction.

Question

Quizplus · Accepted Answer

This is a primary market transaction as IBM is creating and selling additional stock to Morgan Stanley, who is then reselling it to the U.S. public, making it the initial sale of securities.

IBM Creates and Sells Additional Stock to the Investment Banker