Which type of stock is authorized for buying and selling on the market?

Which type of stock is authorized for buying and selling on the market?

• A. New stock
• B. Preferred stock
• C. Listed stock
• D. Common stock

Answer: (C)

The correct answer is that listed stock refers to shares that are authorized for buying and selling on a stock exchange. When a company's stock is listed, it means the security has met the requirements set by the exchange and is available for trading by the public. This ensures that investors have a regulated environment in which they can buy and sell shares, providing greater transparency and liquidity to the market. Common stock and preferred stock also have their places in the financial markets. However, while common stock represents ownership in a company and typically entitles shareholders to vote on corporate matters, it does not specifically denote whether the stock is listed or unlisted. Preferred stock provides fixed dividends and has preferential claims on assets, especially if a company goes bankrupt, but similarly, it doesn't suggest authorization for market trading inherently. New stock refers to newly issued shares, but whether these shares are listed or not depends on whether the company has sought to get them listed on an exchange. Therefore, while common stock, preferred stock, and new stock can potentially be traded, the term "listed stock" is the accurate choice when identifying stocks that are specifically authorized for market trading.

The correct answer is that listed stock refers to shares that are authorized for buying and selling on a stock exchange. When a company's stock is listed, it means the security has met the requirements set by the exchange and is available for trading by the public. This ensures that investors have a regulated environment in which they can buy and sell shares, providing greater transparency and liquidity to the market.

Common stock and preferred stock also have their places in the financial markets. However, while common stock represents ownership in a company and typically entitles shareholders to vote on corporate matters, it does not specifically denote whether the stock is listed or unlisted. Preferred stock provides fixed dividends and has preferential claims on assets, especially if a company goes bankrupt, but similarly, it doesn't suggest authorization for market trading inherently.

New stock refers to newly issued shares, but whether these shares are listed or not depends on whether the company has sought to get them listed on an exchange. Therefore, while common stock, preferred stock, and new stock can potentially be traded, the term "listed stock" is the accurate choice when identifying stocks that are specifically authorized for market trading.