NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Securities Market Segments
Which statement about the primary market in India is correct?
In the primary market a company issues securities, such as through an IPO, and the proceeds of a fresh issue go to the issuer. Trading among investors, where the company receives nothing, belongs to the secondary market.
- ASecondary trading of listed shares takes place between investors in it
- BAn IPO involves a company issuing new shares to the public for the first time, with proceeds going to the issuer for a fresh issueCorrect
- CProceeds of trades go to the company whose shares are traded
- DOnly government securities can be issued in it
Explanation
The primary market is where securities are issued for the first time, and in a fresh issue the money goes to the issuer. Trading among investors happens in the secondary market, where the company receives no proceeds.
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