CSEET · Economic and Business Environment · Indian Financial Markets
A company issues new equity shares directly to the public for the first time through an initial public offering. In which segment of the financial markets does this transaction take place?
The transaction takes place in the primary market, because new securities are being issued for the first time and the proceeds go to the issuing company. The secondary market only handles later trading of already issued securities among investors.
- APrimary marketCorrect
- BSecondary market
- CCall money market
- DForeign exchange market
Explanation
The primary market is where securities are issued afresh and the issuer receives the funds. Trading of already issued shares among investors occurs in the secondary market, so it is wrong here. Call money and forex markets are unrelated to share issuance.
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