NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Introduction to Securities Markets
A company in India issues shares to the public for the first time, and the money raised goes directly to the company. This transaction takes place in which market?
This takes place in the primary market. The primary market is where issuers raise fresh capital by selling new securities, such as in an IPO, and the proceeds go to the company. The secondary market only involves trading between investors and gives no money to the issuer.
- ASecondary market
- BPrimary marketCorrect
- CMoney market
- DDerivatives market
Explanation
When securities are issued for the first time and funds flow to the issuer, it is the primary market. In the secondary market, investors trade among themselves and the issuer receives no proceeds. The money market deals in short-term instruments, so it does not fit an equity IPO.
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