Evercore Technical Practice Test

The distinction between primary offerings and secondary offerings lies in the nature of the shares being sold. Primary offerings refer to the initial sale of stock directly from the company to investors, which typically occurs during an initial public offering (IPO). In this case, the company raises new capital by issuing new shares, which allows it to fund business activities, pay down debt, or invest in growth opportunities.

In contrast, secondary offerings involve the sale of shares that are already owned by existing shareholders, such as company executives, employees, or institutional investors. These shareholders sell their stakes to the public or other investors, but the company does not receive any capital from this transaction. The primary focus in a secondary offering is on the transfer of ownership rather than raising new funds for the company.

The other options either misrepresent the characteristics of these offerings or provide incorrect details about pricing, company status, or the type of instruments involved, which does not accurately reflect the fundamental distinction between primary and secondary offerings.