NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to the Securities Market
A company wants to raise funds by offering shares for the first time to the public through a fresh issue. In which market does this transaction take place?
The transaction takes place in the primary market. When a company issues shares to the public for the first time, such as through an IPO, the money goes to the issuer. Subsequent trading of those shares among investors happens in the secondary market.
- ASecondary market
- BPrimary marketCorrect
- CRepo market
- DDerivatives market
Explanation
The primary market is where securities are issued for the first time and funds flow to the issuer. An IPO is a primary market transaction. The secondary market is where already issued securities are traded among investors.
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