Question

If an individual investor uses the services of a broker to buy and sell stocks that are currently being traded in the stock market, the transaction is referred to as a primary market transaction.
a. False
b. True

Answer 1

Answer:

a. False

Explanation:

A "primary transaction" refers to the selling of new stocks and bonds for the first time towards the public. A great example of this is the "Initial Public Offering" (IPO) which allows "public share issuance."

On the other hand, a "secondary transaction" refers to the trading of investors among themselves. There is no involvement of the issuing companies here. So, this means that if an investor uses the services of a broker to buy and sell stocks that are currently being traded in the stock market, the transaction doesn't directly involve the issuing company. This kind of transaction is then called "secondary."

So, this explains the answer.