Question

Which of the following does not apply to secondary markets?

A. New resources are provided when shares of stock are sold by the corporation to the initial owners.
B. Transactions are important to the efficient allocation of resources in our economy.
C. Transactions help to establish market prices for additional shares that may be issued in the future.
D. Many investors might be unwilling to provide resources to corporations if there is no available mechanism for the future sale of their stocks and bonds to others.

Answer 1

The answer is: A) New resources are provided when shares of stock are sold by the corporation to the initial owners.

Step-by-step explanation:

When an initial public offering (IPO) is carried out, the corporation receives new resources ($) by selling shares of stock to initial owners. An IPO is a type of primary market since stocks are issued for the first time. Primary markets are also known as new issue markets since stocks, bonds or other types of securities are issued there for the first time.