Common stock is sold in the secondary market in round lots of how many shares?

The correct answer indicates that common stock is typically sold in round lots of 100 shares in the secondary market. This convention of 100 shares as a round lot originated from practices in the trading of stock and reflects a standard unit for market transactions, making it easier for both buyers and sellers to trade. In professional trading, round lots are preferred because they represent a uniform quantity that can make execution more efficient and trading costs more manageable.

When stock transactions occur, trading in round lots of 100 shares streamlines the process, as many brokerage firms and exchanges facilitate this standardization. It allows for better liquidity and reduces the complexity that smaller or odd-lot transactions might introduce into the market.

Understanding round lots is essential for anyone involved in trading or investing in stocks, as it directly affects how trades are executed and the efficiency with which stocks are bought and sold.