NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to the Indian Financial Markets
Which of the following statements about the primary market in India is correct?
In the primary market, companies issue new securities directly to investors and receive the proceeds, as in an IPO. Trading between investors takes place in the secondary market, where the issuer receives no funds from subsequent trades.
- ASecurities are traded between investors on the stock exchange
- BCompanies issue new securities to raise funds directly from investorsCorrect
- CIt is the market where only government securities trade
- DThe issuer receives money on every subsequent trade
Explanation
The primary market is where new securities are issued, for example through IPOs or FPOs, and the issuer receives the proceeds. Trading among investors occurs in the secondary market, where the issuer does not receive money.
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