Trading, Accounts & Prohibited ActsQuestion 224 of 398
During a company's initial public offering, an investor pays $18 per share for newly issued stock. Who receives the $18 per share?
a.The investor who previously owned the shares
b.The issuing company (less underwriting compensation)
c.The stock exchange
d.The transfer agent
Explanation
In a primary-market transaction such as an IPO, the proceeds go to the issuing company, which is raising capital, minus the underwriters' compensation. In secondary-market trades, by contrast, the proceeds flow to the selling investor, not the issuer.
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