NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Introduction to Securities Markets
A company issues shares to the public for the first time through an Initial Public Offer and the shares are then listed. Subsequent buying and selling of these shares between investors on the exchange takes place in which market?
Trading of already listed shares between investors on an exchange occurs in the secondary market. The primary market is only where the issuer first raises capital, for example through an IPO. The secondary market provides liquidity and price discovery for existing securities.
- APrimary market
- BSecondary marketCorrect
- CMoney market
- DForward market
Explanation
The primary market is where securities are issued afresh by the issuer, such as in an IPO. Once listed, trading among investors on an exchange happens in the secondary market, which provides liquidity and price discovery. The money market deals in short-term instruments of up to one year.
Did you get it right without looking?
One question tells you little. A timed set on Introduction to Securities Markets shows your real accuracy, how long you take and where you lose marks.
More Introduction to Securities Markets questions
- Which of the following best describes the role of a stock exchange's clearing corporation in the secondary market?
- Which of the following best describes a 'stock exchange' recognised in India for the purpose of trading in securities?
- Which statement about a rights issue by a listed company is correct?
- An investor buys shares of an Indian company at Rs 200 per share, receives a dividend of Rs 10 per share during the year, and sells at Rs 23…
- 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…
- Which of the following is a money market instrument rather than a capital market instrument?