of the following is a primary market transaction? a. You sell 200 shares of IBM stock on the NYSE through your broker. b. IBM issues 2,000,000 shares of new stock and sells them to the public through an investment banker. c. You buy 200 shares of IBM stock from your brother. The trade is not made through a broker--you just give him cash and
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A:
Which of the following is a primary market transaction?
|
a. |
You sell 200 shares of IBM stock on the NYSE through your broker. |
|
b. |
IBM issues 2,000,000 shares of new stock and sells them to the public through an investment banker. |
|
c. |
You buy 200 shares of IBM stock from your brother. The trade is not made through a broker--you just give him cash and he gives you the stock. |
|
d. |
One financial institution buys 200,000 shares of IBM stock from another institution. An investment banker arranges the transaction. |
|
e. |
You invest $10,000 in a mutual fund, which then uses the money to buy $10,000 of IBM shares on the NYSE. |
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- Which of the following is a primary market transaction? You sell 200 shares of Johnson & Johnson stock on the NYSE through your broker. Johnson & Johnson issues 2,000,000 shares of new stock and sells them to the public through an investment banker. You buy 200 shares of Johnson & Johnson stock from your younger brother. You just give him cash and he gives you the stock¾the trade is not made through a broker. One financial institution buys 200,000 shares of Johnson & Johnson stock from another institution. An investment banker arranges the transaction. You invest $10,000 in a mutual fund, which then uses the money to buy $10,000 of Johnson & Johnson shares on the NYSE.You owned 300 shares of Microsoft stock. But you just sold 100 shares this morning. Which one of the following statements best describes the stock sale transaction? Group of answer choices a. This is an example of a secondary market transaction. b. This is an example of primary market transaction. c. This is an example of an exchange of physical assets. d. This is an example of money-market transaction.You recently sold 200 shares of Apple stock to your brother. The transfer was made through a broker, and the trade occurred on the NYSE. This is an example of: a. A primary market transaction. b. A money market transaction. c. A futures market transaction. d. A secondary market transaction. e. An over-the-counter market transaction.
- Given that Local Care, Inc.'s stock is currently selling for $65 a share, calculate the amount of money that Elijah Pearson will make (or lose) on each of the following transactions. Assume that all transactions involve 100 shares of stock, and ignore brokerage commissions. Input all answers as positive values. He short-sells the stock and then repurchases the borrowed shares at $85.Total of $ . He buys the stock and then sells it some time later at $85.Total of $ . He short-sells the stock and then repurchases the borrowed shares at $50.Total of $ .Amherst Corporation, an investment banking company, often has extra cash to invest. Suppose Amherst buys900 shares of Hurricane Corporation stock at $57 per share, representing less than 5% ofHurricane’s outstanding stock. Amherst expects to hold the Hurricane stock for one month andthen sell it. The purchase occurs on December 15, 2018. On December 31, the market price of ashare of Hurricane stock is $58 per share.Requirements1. What type of investment is this for Amherst? Give the reason for your answer.2. Record Amherst’s purchase of the Hurricane stock on December 15 and the adjustment tomarket value on December 31.3. Show how Amherst would report this investment on its balance sheet at December 31 andany gain or loss on its income statement for the year ended December 31, 2018.Lancaster Corporation, an investment banking company, often has extra cash to invest. Suppose Lancaster buys500 shares of Knight Corporation stock at $40 per share, representing less than 5% of Knight’soutstanding stock. Lancaster expects to hold the Knight stock for one month and then sell it.The purchase occurs on December 15, 2018. On December 31, the market price of one share ofKnight stock is $47 per share.Requirements1. What type of investment is this for Lancaster? Give the reason for your answer.2. Record Lancaster’s purchase of the Knight stock on December 15 and the adjustment tomarket value on December 31.3. Show how Lancaster would report this investment on its balance sheet at December 31 andany gain or loss on its income statement for the year ended December 31, 2018
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