Question

Which one of the following transactions occurred in the primary market?

Prudoe Mfg. sold shares of Plastics Tech on NASDAQ.
Alpha, Inc., a publicly owned company, bought shares of New Town Press, also a publicly owned company.
Valerie purchased newly issued shares of Velcro, Inc.

Answer 1

The transaction of Valerie purchasing newly issued shares of Velcro, Inc. took place in the primary market, where stocks are sold directly to the public initially through an IPO.

Step-by-step explanation:

Among the choices provided, Valerie purchased newly issued shares of Velcro, Inc. is the transaction that occurred in the primary market. In the primary market, a company sells its stocks directly to the public for the first time through an initial public offering (IPO). This is an important event because it provides the company with funds to repay early-stage investors, such as angel investors and venture capital firms, as well as to potentially expand company operations. After the initial sale by the company, subsequent trading of its stock takes place on the secondary market, where existing shareholders, not the issuing company, receive the proceeds of the trade.

Answer 2

Valerie purchased newly issued shares of Velcro, Inc.

Step-by-step explanation:

The primary market offer shares directly from the firm.

A firm offer their shares and investor purchases from the firm. After this, the subsequent trades on this share occur on the secondary market.

The primary market enables a way to raise funds without taking debt.

Valerie is purchasing new shares so, it is acting in the primary market.

The other trasnaction are trading shares already issued, which is secondary market.