Chapter 2 - How Shares Are Created?

Question 1

What is the difference between the primary and secondary market?

Answer 1

Primary market is when shares are initially sold on the stock market (IPO). Secondary market is when smaller investors buy shares from shareholders rather than the company.

Question 2

What is a vendor share?

Answer 2

A vendor share is when you buy shares with shares from another company. This usually occurs during acquisition.

Question 3

What is share options?

Answer 3

Share options is when directors or key workers may be rewarded for their work. They can buy shares a set price usually cheaper than market value.

Question 4

What is share cancelling?

Answer 4

Share cancelling is when shares are bought back from the shareholders.