Which of the Following Statements Is True About Secondary Markets

question 21

Multiple Choice

Which of the following statements is true about secondary markets?

• A) In secondary markets, outstanding shares of stock are bought and sold among investors.
• B) Most secondary market transactions directly affect the capital of the firm that issues the securities.
• C) An active secondary market causes firms to sell their new debt or equity issues at a higher transaction cost of funds.
• D) All of the above statements are true.

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Definitions:

Sweatshop Labor Fallacy

A misconception that all factory work in developing countries is exploitative and harmful, ignoring the complexity and variation of labor conditions.

Heckscher-Ohlin Theory

An economic theory that suggests countries export what they can most efficiently and abundantly produce, based on factors of production like land, labor, and capital.

Absolute Advantage

The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Comparative Advantage

The skill of an entity, whether a person, corporation, or country, to create a product or service with smaller opportunity costs than its competition.