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

Ms. Kavita Rao wants to understand where a company's shares are first offered to the public at the time the company raises fresh capital for the first time through an Initial Public Offer. Which segment of the securities market does this activity belong to?

An Initial Public Offer is made in the primary market, because the company is issuing new securities directly to investors to raise fresh capital. Trading of already issued shares between investors takes place in the secondary market, which is a different segment.

  1. APrimary marketCorrect
  2. BSecondary market
  3. CMoney market
  4. DDerivatives market

Explanation

When a company issues securities for the first time or raises fresh capital directly from investors, the issue takes place in the primary market. The secondary market is where already-issued securities are traded among investors. The money market deals with short-term instruments, so it does not fit an IPO.

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