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svetoff [14.1K]
4 years ago
5

IBM creates and sells additional stock to the investment banker Morgan Stanley. Morgan Stanley then resells the issue to the U.S

. public through its mutual funds. Morgan Stanley is acting as a(n) ______.
A. asset transformation by Morgan Stanley.B. primary market transaction.C. foreign exchange transaction.D. money market transaction.E. forward transaction.
Business
1 answer:
ivanzaharov [21]4 years ago
5 0

Answer: Asset Transformer

Explanation: The above is an example of asset transformation by Morgan Stanley. The transaction itself is an example of a primary market transaction.

An asset transformers (Morgan Stanley in this case) are involved in the conversion of risky assets (IBM stocks, in this case) into safer assets by creating and selling assets with risk characteristics that investors are more comfortable with (E.g. Mutual funds). The funds acquired by selling these assets are used to purchase other assets that may have for more risk and possibility for higher returns.

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