Question

You recently sold 100 shares of Microsoft stock to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following best describes this transactiona. This is an example of a money market transaction.
b. This is an example of an exchange of physical assets.
c. This is an example of a primary market transaction.
d. This is an example of a direct transfer of capital.
e. This is an example of a derivative market transaction.

Answer 1

Answer:

d. This is an example of a direct transfer of capital.

Explanation:

Direct transfer of stocks or securities refers a to situation whereby a seller of securities or stocks sell them to the buyer direct without involving any financial institution. Under this, seller will directly deliver the security certificate to the buyer who will in turn pay the seller in cash or by check immediately.

Therefore, collecting check from your brother for the Microsoft stock and giving your brother the stock certificate is an example of a direct transfer of capital.