SIE practice questioneasyPrimary Market Proceeds
In a primary market transaction, the proceeds from the sale of securities go to:
- AThe investor purchasing the securities
- BThe stock exchange where the security is listed
- CThe issuer of the securities✓ Correct answer
- DThe SEC as a regulatory fee
Explanation
Why C — The issuer of the securities
In the primary market, the issuer sells newly created securities to raise capital — so the proceeds go directly to the issuer (minus underwriting fees). This is the fundamental purpose of the primary market: capital formation. In secondary market transactions, proceeds go to the selling investor, not the issuer. Understanding who receives the proceeds is the key to distinguishing primary from secondary market transactions.
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