SIE Exam Question 265: Answer and Explanation

Question: 265

When a corporation announces that it is seeking additional equity capital through a sale of additional authorized but unissued shares,

• A. this is a secondary distribution
• B. this is a primary distribution
• C. this is an IPO
• D. this is a split offering

Correct Answer: B

Explanation:

B: The 'trick' with this question is that anytime a company is selling NEW previously unissued shares from their Authorized shares maximum, those shares are NEW ---- Primary distribution means the shares being sold are NEW, never before issued, not previously owned by anyone.