ACCA FM · Chapter 2 · Question 8 of 10
Which of the following describes a transaction in the secondary market?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) An investor buys existing shares in a listed company from another investor through the stock exchange
Explanation
The primary market is where new securities are issued and the issuer receives the funds. The secondary market is where existing securities are traded between investors, so the company receives no new finance. A liquid secondary market makes investors more willing to buy securities in the primary market.
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