Which of the following is a primary market transactionσ
A) you sell 200 shares of johnson & johnson stock on the nyse through your broker.
B) johnson & johnson issues 2,000,000 shares of new stock and sells them to the public through an investment banker.
C) you buy 200 shares of johnson & johnson stock from your younger brother. you just give him cash and he gives you the stock¾the trade is not made through a broker.
D) one financial institution buys 200,000 shares of johnson & johnson 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 johnson & johnson shares on the nyse.

Question

Quizplus · Accepted Answer

A primary market transaction is the issuance of new securities by the company, sold directly to the public or institutional investors through an investment banker. Option B clearly explains the issuance of new shares by Johnson & Johnson and the sale to the public through an investment banker. The other options are all secondary market transactions.

Which of the Following Is a Primary Market Transactionσ