Asked by Daisy Farhm on May 10, 2024
Verified
When a new issue of common share is brought to market,it is the marginal investor who determines the price at which trade occurs.
Marginal Investor
A marginal investor is a representative investor whose actions reflect the overall market sentiment and whose transactions can affect a security's price.
Common Share
Equity ownership in a company, providing voting rights and entitling the shareholder to a share of the company's success through dividends and/or capital appreciation.
- Grasp the role of the marginal investor in determining stock prices.
Verified Answer
JB
Jasmine BaileyMay 17, 2024
Final Answer :
True
Explanation :
The marginal investor is the one whose decision to buy or sell will tip the balance of supply and demand, and therefore determine the price at which trade occurs. This means that their actions will have a significant impact on the market price of the common share issue. Therefore, when a new issue of common shares is brought to market, it is ultimately the marginal investor who determines the price at which trade occurs.
Learning Objectives
- Grasp the role of the marginal investor in determining stock prices.