NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Introduction to Securities Markets
In the Indian securities market, which of the following best describes the primary market?
The primary market is where securities are issued for the first time by the issuer to raise capital, for example through an IPO. Trading of already issued securities among investors happens in the secondary market, not the primary market.
- AA market where existing securities are traded among investors on a stock exchange
- BA market where securities are issued for the first time by the issuer to raise capitalCorrect
- CA market where only government securities are traded
- DA market where derivative contracts are settled in cash
Explanation
The primary market is where issuers raise fresh capital by issuing new securities, for example through an IPO or FPO. Trading of already issued securities among investors takes place in the secondary market, so the first option is wrong.
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