NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to the Securities Market
Which of the following is a function of the primary market in the Indian securities market?
The primary market enables companies to raise fresh capital by issuing new securities to investors, for example through an IPO. Trading of existing listed shares takes place in the secondary market, while settlement guarantee and demat record keeping are handled by clearing corporations and depositories.
- AProviding a platform for investors to trade existing listed shares
- BEnabling companies to raise fresh capital by issuing new securitiesCorrect
- CGuaranteeing settlement of trades between brokers
- DMaintaining investor demat balances
Explanation
The primary market is where securities are issued for the first time, so issuers raise fresh capital from investors. Trading of already issued shares happens in the secondary market. Guaranteeing settlement is done by clearing corporations, and holding balances is done by depositories.
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