Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following is a primary market transaction?

A company repurchases its own shares from existing shareholders.

A mutual fund purchases shares of a company from another investor on the secondary market.

An investor sells previously purchased shares to another investor on the stock exchange.

A corporation issues new shares of stock to the public for the first time through an initial public offering (IPO).

Previous problemNext problem

Verified step by step guidance

Understand the concept of a primary market transaction: A primary market transaction occurs when securities are created and sold directly by the issuing entity to investors. This is the first time the securities are made available to the public.

Differentiate between primary and secondary market transactions: In the secondary market, securities are traded between investors after they have been issued in the primary market. The issuing entity is not directly involved in secondary market transactions.

Analyze the options provided: Evaluate each option to determine whether it involves the creation and direct sale of securities by the issuing entity (primary market) or the trading of existing securities between investors (secondary market).

Focus on the correct answer: The correct answer is the scenario where a corporation issues new shares of stock to the public for the first time through an initial public offering (IPO). This is a classic example of a primary market transaction.

Conclude the reasoning: The other options involve repurchasing shares, mutual fund transactions, or investor-to-investor trades, all of which are secondary market activities. Only the IPO involves the creation and direct sale of new securities by the issuing entity.