Skip to content

CSEET · Economic and Business Environment · Indian Financial Markets

Ananya buys 100 shares of a listed Indian company through her broker on the NSE from another investor, Ravi. Which statement about this transaction is correct?

This is a secondary market transaction. Ananya buys existing shares from another investor through the exchange, so the payment goes to the selling investor and not to the company. The company raises no new capital. Only ownership of already issued shares changes hands.

  1. AIt is a primary market transaction because shares are being bought for the first time by Ananya
  2. BThe company receives the price paid by Ananya
  3. CIt is a secondary market transaction and the sale price goes to the selling investor, not to the companyCorrect
  4. DIt is a private placement because only two parties are involved

Explanation

Buying existing listed shares from another investor on an exchange is a secondary market trade. Ownership moves from Ravi to Ananya and the money goes to Ravi (less costs). The company's capital is unchanged, so the claim that the company receives the price is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Indian Financial Markets shows your real accuracy, how long you take and where you lose marks.

Practise Indian Financial MarketsFree diagnostic mock

More Indian Financial Markets questions