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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to the Indian Financial Markets

Which of the following is a function of the primary market in India?

The primary market's function is to raise fresh capital for issuers, for instance through an initial public offer. Trading existing shares happens in the secondary market, while settlement is handled by clearing corporations, and index computation is done by index providers.

  1. AProviding liquidity by letting investors trade existing shares on the exchange
  2. BRaising fresh capital for issuers through an IPOCorrect
  3. CSettling trades between brokers through the clearing corporation
  4. DComputing the closing value of the Nifty 50 index

Explanation

The primary market is where securities are issued for the first time, so companies raise new funds, for example through an IPO. Trading of already issued securities occurs in the secondary market, and settlement is a clearing corporation function.

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