Skip to content

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

Ms. Kavya Nair wants to understand the role of the primary market before applying for shares of a company that is coming out with its first public offer. Which of the following best describes the primary market?

The primary market is where issuers sell securities for the first time directly to investors to raise funds, such as through an IPO. Trading of already issued securities among investors takes place in the secondary market on stock exchanges, which is a different segment.

  1. AA market where already issued securities are traded between investors on a stock exchange
  2. BA market where securities are issued for the first time by the issuer to raise funds directly from investorsCorrect
  3. CA market where only government securities are traded among banks
  4. DA market where derivative contracts are settled by the clearing corporation

Explanation

The primary market is where new securities are issued by companies or governments to raise capital, for example through an IPO. Trading of already issued securities between investors happens in the secondary market, so option A describes the wrong market.

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