Skip to content

NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to the Indian Capital Market

Mr. Arvind Mehta says that the primary market and secondary market are the same thing because both involve shares. Which statement correctly distinguishes them?

The primary market is where issuers sell new securities to raise capital, such as in an IPO, while the secondary market is where already issued securities are bought and sold among investors, giving liquidity. The other statements reverse these roles or wrongly limit instruments.

  1. AIn the primary market securities are issued afresh by the issuer to investors, while the secondary market is where existing securities are traded among investorsCorrect
  2. BIn the primary market existing securities are traded between investors, while new securities are issued in the secondary market
  3. CThe primary market deals only in debt, and the secondary market deals only in equity
  4. DThe primary market operates only through stock exchanges, and the secondary market operates only off-exchange

Explanation

The primary market is where issuers raise fresh capital by issuing securities, for example through an IPO. The secondary market provides liquidity by letting investors trade already issued securities. The other options reverse the roles or wrongly restrict instruments or venues.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to the Indian Capital Market shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to the Indian Capital MarketFree diagnostic mock

More Introduction to the Indian Capital Market questions