When Patricia sells her GM common stock at the same time that Brian purchases the same amount of GM stock, GM receives:
A. the "spread" between the Bid and Ask of the transaction
B. The dollar amount of the transaction, less brokerage fees.
C. only the par value of the common stock
D. nothing
This is another question that makes my brain hurt, I am leaning toward (D) nothing, because the sale and purchase of GM common stock happened at the same time for the same price, so basically paper exchanged hands and the company receives NOTHING.
agree
Of course if the stock goes down, GM is "worth less".
Nothing
To determine the correct answer, let's break down the options and analyze the scenario:
A. The "spread" between the Bid and Ask of the transaction: The bid is the highest price a buyer is willing to pay, and the ask is the lowest price a seller is willing to accept for a security. The spread is the difference between these two prices. In the given scenario, Patricia sells her GM common stock at the same time Brian purchases the same amount of GM stock. This implies that the transaction occurred at the same price without any difference between the bid and ask prices. Therefore, GM would not receive any spread in this particular case.
B. The dollar amount of the transaction, less brokerage fees: This option suggests that GM receives the total dollar amount of the transaction, excluding any brokerage fees. While GM does benefit from the sale and purchase of its stock, it is important to note that this is simply a transfer of ownership between Patricia and Brian. The dollar amount exchanged solely benefits the respective parties involved in the transaction, not GM itself.
C. Only the par value of the common stock: Par value is often assigned to shares when they are initially issued by a company and represents the minimum price at which a company is allowed to issue shares. However, in most cases, the market price of a stock generally exceeds its par value. Therefore, it is unlikely that GM would receive only the par value of the common stock in this scenario.
D. Nothing: This option suggests that GM receives nothing from the sale and purchase of its stock. While it is true that there is no direct monetary benefit to GM in this situation, it is important to acknowledge that share transactions contribute to market liquidity and can indirectly impact the company's stock price and overall market perception.
Considering all the options and the scenario described, the most appropriate answer is D. GM does not directly receive any proceeds or benefits from the sale and purchase of its common stock in this particular scenario.