NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to the Indian Capital Market
A company wants to raise funds by issuing shares for the first time to the public through a fresh offer document. In which segment of the securities market does this transaction take place?
The transaction occurs in the primary market, because the company is issuing new securities directly to investors for the first time and receiving the proceeds. The secondary market only involves trading of already issued securities between investors, with no fresh money going to the issuer.
- APrimary marketCorrect
- BSecondary market
- COver-the-counter derivatives market
- DMoney market
Explanation
Fresh issuance of securities by an issuer to investors, such as an IPO, takes place in the primary market. The secondary market only deals with trading of already issued securities among investors. The money market handles short-term instruments, not equity issuance.
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