Although the secondary market does not generate funds for the original issuer of securities, the existence of the secondary market makes
A) common stock overvalued.
B) common stock more attractive
C) real investment more liquid.
D) tax liability for the issuer less burdensome.

Question

Quizplus · Accepted Answer

The existence of a secondary market makes common stock more attractive to investors because they know that they can easily sell their shares if they need to. This increased attractiveness can lead to higher demand and therefore a higher price for the stock on the primary market. Additionally, the existence of a secondary market can provide investors with more information about the company and its stock, which can help them make more informed investment decisions. However, the secondary market does not directly affect the liquidity of real investments or the tax liability of the issuer.

Although the Secondary Market Does Not Generate Funds for the Original