MODULE 5

The Security Markets
Types of Stock Market Transactions

Types of stock market transactions include IPO, secondary market offerings, secondary markets, private placement, and stock repurchase.

LEARNING OBJECTIVES

Differentiate between the different types of stock market transactions

KEY TAKEAWAYS

Key Points

An initial public offering ( IPO ), or stock market launch, is a type of public offering where shares of stock in a company are sold to the general public, on a securities exchange, for the first time.
A secondary market offering is a registered offering of a large block of a security that has been previously issued to the public.
In the secondary market, securities are sold by and transferred from one investor or speculator to another. It is therefore important that the secondary market remain highly liquid.
Private placement (or non-public offering) is a funding round of securities which are sold not through a public offering, but rather through a private offering, mostly to a small number of chosen investors.
Stock repurchase (or share buyback) is the reacquisition by a company of its own stock.
Key Terms

FINRA: In the United States, the Financial Industry Regulatory Authority, Inc., or FINRA, is a private corporation that acts as a self-regulatory organization (SRO). FINRA is the successor to the National Association of Securities Dealers, Inc. (NASD). Though sometimes mistaken for a government agency, it is a non-governmental organization that performs financial regulation of member brokerage firms and exchange markets. The government organization which acts as the ultimate regulator of the securities industry, including FINRA, is the Securities and Exchange Commission.
underwriter: An entity which markets newly issued securities