NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to the Indian Capital Market
Ritu, a first-time investor in Pune, asks which segment of the securities market is used when a company issues shares to the public for the first time to raise fresh capital. Which answer should her advisor give?
The primary market is where an issuer sells new securities, such as in an IPO, directly to investors to raise fresh capital. Later trading of those securities among investors happens in the secondary market, not the primary market.
- APrimary marketCorrect
- BSecondary market
- CMoney market
- DDerivatives market
Explanation
Fresh capital raised directly by an issuer through an IPO happens in the primary market. Trading of already issued securities among investors takes place in the secondary market. The money market deals with short-term instruments, and derivatives trade contracts derived from underlying assets.
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