Question

In: Finance

A document describing a new security issue and the issuing company is called a(n) _____. Select...

A document describing a new security issue and the issuing company is called a(n) _____.

Select one:

a. prospectus statement

b. registration statement

c. underwriting statement

d. abridged statement

e. shelf statement

If you wanted to purchase previously issued shares of stock from another investor, you would trade in the _____.

Select one:

a. debt market

b. primary market

c. secondary market

d. derivatives market

e. IPO market  

Solutions

Expert Solution

1.

A document describing a new security issue and the issuing company is called a(n) _____.

Correct option is > a. prospectus statement

Reason:

The prospectus is document which contains the prospective of the company based on new project, business and financial details. The prospectus contains key management details and financial forecast of the issuing company. The investors decide to invest in issuing company based on details in prospectus.

2.

If you wanted to purchase previously issued shares of stock from another investor, you would trade in the _____.

Correct option is > c. secondary market

Reason:

The shares are initially issued in primary market which is called IPO or Initial Public Offer. The investors can sell their share in secondary market which is platform for new investors who want to buy the shares of the firm from investors.

Secondary market is platform of only investors whereas Primary market is platform of the Firm and Investors which get initial allotment of the shares.

jeff jeffy answered 2 years ago
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