Quiz3_B(Answers)

Explain a primary market is the market in which

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Unformatted text preview: ing an example of a primary or a secondary market transaction? Explain. A primary market is the market in which corporations raise capital by issuing new securities. An initial public offering is a stock issue in which privately held firms go public. Therefore, an IPO would be an example of a primary market transaction. 3. (4 points) A company has an EPS of $5.00, a cash flow per share of $11.00, and a price/cash flow ratio of 6.0x. What is its P/E? EPS = CFPS = P/CF = P = P/E = $ 5.00 $ 11.00 6.0 $ 66.00 13.2x 6.00 * 11.00 = 66.00 / 5.00 = B ‐ 1...
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