Primary Offering

A company that is already publicly traded issues additional new shares to raise growth capital. This is best described as a:

1. A.Initial public offering (IPO)Wrong. An IPO is specifically a company's first sale of shares to the public; this company is already public.
2. B.Follow-on offeringCorrect. A subsequent share issuance by an already-public company is a follow-on offering.
3. C.Private investment in public equity (PIPE)Wrong. A PIPE is a privately negotiated sale of securities to select investors, not a public follow-on offering.
4. D.Tender offerWrong. A tender offer is a purchase of outstanding shares from shareholders, not a new issuance of shares.

Why: A follow-on offering is a subsequent issuance of shares by a company that is already public, as distinct from an initial public offering (IPO), which is the company's first sale of shares to the public.

In a secondary offering of shares (as opposed to a primary offering), the sale proceeds go to:

1. A.The company issuing the sharesWrong. That describes a primary offering; in a secondary offering, no new shares are issued by the company.
2. B.The selling shareholders offering their existing sharesCorrect. In a secondary offering, existing holders sell already-issued shares and keep the proceeds.
3. C.The underwriting syndicate, as compensationWrong. The syndicate earns its compensation through the underwriting spread, not the full sale proceeds.
4. D.FINRA, as a registration feeWrong. Regulatory filing fees are a small, separate cost; they do not consume the sale proceeds.

Why: In a secondary offering, existing shareholders (such as founders, early investors or private equity sponsors) sell their own already-issued shares, so the proceeds go to those selling shareholders — not to the company. A primary offering, by contrast, involves the company issuing new shares and receiving the proceeds itself.