NISM Certifications · NISM-Series-XV: Research Analyst · Introduction to Securities Market
Which of the following is a feature of the primary market as distinct from the secondary market?
In the primary market, new securities are issued and the money raised goes to the issuing company. Trading of already issued securities between investors on exchanges happens in the secondary market, where the issuer does not receive the sale proceeds.
- ASecurities are traded between investors on an exchange platform
- BFunds raised go to the issuer company through issue of new securitiesCorrect
- CPrices are determined only by the depository
- DThe clearing corporation sets the issue price
Explanation
The primary market deals with fresh issuance, so proceeds flow to the issuer. Trading between investors is the secondary market. Depositories hold securities and do not set prices, and clearing corporations do not set issue prices.
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