​Which of the Following Is a Primary Market Transaction

question 31

Multiple Choice

​Which of the following is a primary market transaction?

• A) ​You sell 200 shares of IBM stock on the NYSE through your broker.
• B) ​You buy 200 shares of IBM stock from your brother.The trade is not made through a broker;you just give him cash and he gives you the stock.
• C) ​IBM issues 2,000,000 shares of new stock and sells them to the public through an investment banker.
• D) ​One financial institution buys 200,000 shares of IBM stock from another institution.An investment banker arranges the transaction.
• E) ​IBM sells 2,000,000 shares of treasury stock to its employees when they exercise options that were granted in prior years.

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Definitions:

Unit Variable Costs

The costs associated with producing one unit of a product or service, which vary directly with the volume of production.

Fixed Costs

Fixed charges that are unaffected by the volume of output or the quantity sold, including rental fees and payrolls.

Production Data

Information related to the amount, type, and quality of goods or services produced.

Contribution Margin

A financial metric that represents the difference between the sales revenue of a product and the variable costs associated with producing that product.