What is the term for the sale of stock on a public stock exchange?

• A. Working capital
• B. Initial Public Offering
• C. Private placement
• D. Conditions

Answer: (B)

Selling stock on a public stock exchange for the first time is called an Initial Public Offering. This is when a private company becomes publicly traded and raises capital by issuing shares to a broad group of investors. The new shares are sold in the primary market, often with the help of underwriters who set the price and help allocate shares. After the IPO, those shares begin trading on the public exchange in the secondary market. The other terms don’t describe this event: working capital is about short-term liquidity, private placement is selling securities to a select group rather than the general public, and “conditions” isn’t a term for stock sales.