NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Securities Market Segments
In the Indian securities market, which of the following is the segment where a company raises fresh capital by issuing shares directly to investors for the first time through an IPO?
The primary market is the correct answer. An IPO involves the company issuing new shares to investors and receiving the proceeds directly. Subsequent trading of these shares between investors on exchanges happens in the secondary market, where the issuing company does not receive any funds.
- APrimary marketCorrect
- BSecondary market
- CDerivatives market
- DRepo market
Explanation
Fresh issuance of securities by an issuer to investors, including an IPO, takes place in the primary market. Trading of already issued securities among investors happens in the secondary market, and the issuer receives no money from such trades.
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