NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to the Indian Financial Markets
Which of the following is a primary market activity?
A company allotting new shares to the public through an IPO is a primary market activity, because securities are issued afresh and the proceeds go to the issuer. Trades of existing shares between investors take place in the secondary market.
- AAn investor sells 100 shares of Infosys on the NSE to another investor
- BA company allots new shares to the public through an IPOCorrect
- CA mutual fund buys listed bonds from another institution in the exchange market
- DAn investor buys shares from a promoter through a bulk deal on the exchange
Explanation
The primary market is where securities are issued for the first time and the issuer receives the funds. An IPO allotment is such an issue. The other options are trades between holders of existing securities, which take place in the secondary market.
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