Question

Secondary market transactions in shares ...
A involve additional shares being issued by companies.
B involve changes in the ownership of existing shares.
C allow companies to borrow more heavily.
D only involve transfers of ownership between existing shareholders.

Answer 1

Answer: [B] involve changes in the ownership of existing shares.

Explanation:

The shares already issued change hands. The change can be between two existing shareholders or between one existing shareholder and a non-shareholder. The non-shareholder becomes a shareholder on buying the shares.

Other options:

A involve additional shares being issued by companies.
This happens in the primary market as it is a fresh issue of shares.
C allow companies to borrow more heavily.

Nothing happens to the company's ability to borrow. The company's cash flows are not affected at all.
D only involve transfers of ownership between existing shareholders.

The share can be transferred to a person who is not a shareholder.