NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to the Securities Market
A company raises funds by selling new shares directly to the public through an Initial Public Offer. In which segment of the securities market does this transaction take place?
The transaction takes place in the primary market. An Initial Public Offer is a fresh issue of shares by the company to investors, so funds flow to the issuer. Later trading of those shares among investors occurs in the secondary market.
- ASecondary market
- BPrimary marketCorrect
- CDerivatives market
- DMoney market
Explanation
Fresh issuance of securities by an issuer to investors, such as an IPO, takes place in the primary market. Secondary market trades are between investors after listing. Derivatives and money market involve different instruments.
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