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NISM Certifications · NISM-Series-XV: Research Analyst · Introduction to Securities Market

In the Indian securities market, which of the following is a feature of the primary market that distinguishes it from the secondary market?

The primary market is where securities are issued for the first time, so the issuer receives the money raised. In the secondary market, existing securities change hands between investors and the issuer gets no proceeds from those trades.

  1. ASecurities are bought and sold between investors on a stock exchange
  2. BThe issuer receives the money raised from the sale of securitiesCorrect
  3. CPrices are determined only by the circuit filters set by the exchange
  4. DTrades are settled only through a clearing corporation guarantee fund

Explanation

In the primary market securities are issued afresh and the proceeds go to the issuer. In the secondary market, investors trade among themselves and the issuer receives nothing from these trades. Hence only the second option describes the primary market.

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