Question
27. Initial Public Offerings (IPOs) occur in the: A. Secondary market B. Primary market C. Derivatives market D. Foreign exchange market
Answer
4.2
(165 Votes)
Jonah
Professional · Tutor for 6 years
Answer
The correct answer is 'B'.
Explanation
## Step 1The question is asking in which type of market Initial Public Offerings (IPOs) occur.## Step 2An IPO is when a company sells shares of stock to the public for the first time. This is typically done to raise capital for the company.## Step 3The term "secondary market" refers to a market where investors buy and sell securities they already own. This does not fit the context of IPOs, as IPOs involve the initial sale of securities.## Step 4The term "derivatives market" refers to a market where derivatives, such as futures and options, are traded. This does not fit the context of IPOs, as IPOs involve the sale of actual shares of stock.## Step 5The term "foreign exchange market" refers to a market where currencies are traded. This does not fit the context of IPOs, as IPOs involve the sale of shares of stock, not currencies.## Step 6The term "primary market" fits the context of the sentence because a primary market is where new securities, such as stocks and bonds, are issued and where the security is bought directly from the issuer, which often are companies that just made initial public offerings (IPOs).