Question

Which of the following comparisons BEST describes the essential difference between a primary distribution and a secondary distribution?

A. a primary distribution can only be made for equity issues while a secondary distribution can be made for both equity and debt issues
B. a primary distribution can only be made for issues that exceed a specified dollar amount while a secondary distribution can be made for issues of all sized
C. a primary distribution must be made at a fixed public offering price (POP) while a secondary distribution must be made at the current market price
D. a primary distribution involves a sale of newly issued shares by the issuer while a secondary distribution involves the sale of already issued and outstanding shares

Answer 1

The essential difference between a primary distribution and a secondary distribution is that a primary distribution involves a sale of newly issued shares by the issuer while a secondary distribution involves the sale of already issued and outstanding shares.

Step-by-step explanation:

The essential difference between a primary distribution and a secondary distribution is that a primary distribution involves a sale of newly issued shares by the issuer while a secondary distribution involves the sale of already issued and outstanding shares.

Primary distribution, also known as an Initial Public Offering (IPO), refers to the first sale of stock by a company to the public. This is when the stock is initially issued and sold to investors.

Secondary distribution, on the other hand, involves the sale of shares that have already been issued and are traded in the secondary market. This can include shares sold by existing shareholders or additional offerings by the company.