Regarding financial markets, select the correct alternative:

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Question restatement: Regarding financial markets, select the correct alternative:

Option 1: Public offerings require registration with a regulator (Ontario Securities Commission in Canada).
- Analysis: This statement aligns with standard capital markets practice in regulated jurisdictions. Public offerings typically must be registered with a securities regulator and receive clearance before investors can participate, ensuring disclosure and investor protection. The reference to the Ontario Securities Commission is an example of such a regulator in Canada, illustrating the general principle of registration and oversight.

Option 2: Primary markets are only relevant for stock issuance.
- Analysis: This is misleading. Primary markets cover the initial issuance of new securities, which can include not only stocks but also bonds and other instruments. The phrase "only relevant for stock issuance" ignores the broader scope of primary markets across different security types, and it oversimplifies market structure.

Option 3: Corporations do not care about secondary markets as they are not involved in those transactions.
- Analysis: Inaccurate. While corporations are not directly executing secondary trades, secondary market activity affects liquidity, valuation, and cost of capital. Companies monitor secondary market performance and investor perception; thus, the statement incorrectly minimizes corporate interest in secondary markets.

Option 4: Profitable stock transactions in the secondary market include a positive cash flow to the issuer (corporation).
- Analysis: This is incorrect. Secondary market trades involve buyers and sellers exchanging existing securities, and the issuer does not receive cash from these transactions. Cash flow to the issuer occurs during primary market activities (new issues), not during secondary trading.

Summary thought process: Option 1 correctly captures a fundamental regulatory requirement for public offerings, reflecting standard practice of registration and oversight. The remaining options contain factual or conceptual errors about primary versus secondary markets, corporate involvement, and who benefits financially from secondary trades.

COMM_V 298 101 102 103 2025W1 2025W1 COMM 298 Midterm Exam October 17, 2025 - Requires Respondus LockDown Browser

Regarding financial markets, select the correct alternative:

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