The Purpose of Secondary Trading Is To

question 52

Multiple Choice

The purpose of secondary trading is to:

• A) provide liquidity and competition between investments.
• B) provide a market for securities not handled in primary trading.
• C) provide jobs for brokers and dealers.
• D) provide lower commissions than on the organized exchanges.

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Definitions:

Underwriting Syndicate

A group of financial institutions that work together to issue and distribute a new security to the public.

IPO

Initial Public Offering, the process by which a private company becomes publicly traded by offering its shares for the first time to the public.

Venture Capitalists

Investors who provide capital to start-up companies and small businesses with perceived long-term growth potential, often taking a stake in the company in exchange.

IPOs

Initial Public Offerings, a process where a private company offers shares to the public in a new stock issuance to raise capital.