CSEET · Economic and Business Environment · Indian Financial Markets
In the Indian capital market, an Initial Public Offer (IPO) by an unlisted company is best described as a transaction in which:
An IPO is the first issue of securities by an unlisted company to the public, and the company itself receives the proceeds. It belongs to the primary market. Trades between investors on an exchange happen in the secondary market and bring no funds to the issuer.
- AExisting shareholders trade shares among themselves on the stock exchange
- BA company issues new securities to the public for the first time and receives the funds directlyCorrect
- CA listed company buys back its shares from the open market
- DA mutual fund redeems units from its investors
Explanation
An IPO is the first public issue of securities by an unlisted company and falls in the primary market, so the issuer receives the money raised. Trading among existing holders is a secondary market activity, which is why the first option is wrong.
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