The Basic Distinction Between a Primary and a Secondary Market

question 48

Multiple Choice

The basic distinction between a primary and a secondary market is

• A) proceeds from sales in the primary market go to the current owner of a security; proceeds in secondary market go to the original owner.
• B) primary markets involve direct dealings within regional exchanges.
• C) only new securities are sold in the primary market; only outstanding securities are bought and sold in the secondary market.
• D) primary markets deal exclusively in bonds; secondary markets deal primarily in common stock.
• E) None of the above.

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Definitions:

Accounts Payable-Marigold

This term refers to the money owed by a business to its creditors specifically related to marigold transactions, which might include purchases of marigold supplies or services.

Debit Memo

A document issued by a buyer to a seller to adjust or correct a previously issued invoice.

Multiple-Step Income Statement

A multiple-step income statement is a detailed financial statement that separates operating revenues and expenses from non-operating ones, providing a thorough insight into a company's financial activities.

Accounting Records

Documented evidence of a business's financial transactions, used for tracking and reporting purposes.