NISM Certifications · NISM-Series-XV: Research Analyst · Introduction to Securities Market
In the Indian securities market, which of the following is the primary function of the primary market?
The primary market exists to let issuers raise fresh capital by issuing new securities to investors, for example through IPOs or rights issues. Trading of already issued securities among investors happens in the secondary market, not the primary market.
- ATrading of existing shares between investors on the exchange
- BRaising fresh capital by issuers through issue of new securitiesCorrect
- CSettlement of trades through the clearing corporation
- DProviding price discovery through derivative contracts
Explanation
The primary market is where securities are issued for the first time, allowing companies and governments to raise fresh funds. Trading of already issued securities takes place in the secondary market. Clearing and derivatives are separate market functions.
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