​ Which of the Following Statements Is CORRECT

question 12

Multiple Choice

​ Which of the following statements is CORRECT?

• A) ​If Apple issues additional shares of common stock through an investment banker, this would be a secondary market transaction.
• B) ​If you purchased 100 shares of Apple stock from your sister-in-law, this would be an example of a primary market transaction.
• C) ​The IPO market is a subset of the secondary market.
• D) ​Only institutions, and not individuals, can participate in derivatives market transactions.
• E) ​As they are generally defined, money market transactions involve debt securities with maturities of less than one year.

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Definitions:

Accrual Basis of Accounting

Accrual basis of accounting is a method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Defined Benefit Pension Plan

A type of pension plan where the benefits that a retiree will receive are calculated based on factors such as salary history and duration of employment.

Service Cost

The expense recognized by an employer for the portion of projected benefit obligations earned by employees in the current period in a defined benefit plan.

Interest Cost

The total interest expense associated with borrowing money, including the amortization of any discount or premium, relevant to the period in which it is incurred.