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

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Multiple Choice

Which of the following is an example of a secondary market transaction?

A corporation sells newly issued stock to the public in an initial public offering (IPO).

A company issues new bonds directly to investors.

A private company sells shares directly to a venture capital firm.

An investor sells shares of Apple Inc. to another investor on the New York Stock Exchange.

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Verified step by step guidance

Understand the concept of secondary market transactions: Secondary markets are where securities are traded after their initial issuance. This means that the securities are being bought and sold between investors, rather than being issued directly by the company.

Differentiate between primary and secondary market transactions: Primary market transactions involve the initial issuance of securities directly from the company to investors (e.g., IPOs or new bond issuances). Secondary market transactions occur when investors trade securities among themselves, without the involvement of the issuing company.

Analyze the given options: Review each option to determine whether it represents a primary or secondary market transaction. For example, an IPO is a primary market transaction because the corporation is issuing new stock directly to the public.

Focus on the correct answer: The transaction where 'An investor sells shares of Apple Inc. to another investor on the New York Stock Exchange' is a secondary market transaction because it involves the trading of existing shares between investors, not the issuance of new shares.

Conclude the reasoning: Secondary market transactions are essential for providing liquidity to investors, allowing them to buy and sell securities freely after their initial issuance. This is the key characteristic of the correct answer in this problem.