NISM Certifications · NISM-Series-XV: Research Analyst · Introduction to Securities Market
Which statement about the secondary market in India is correct?
In the secondary market investors trade securities that have already been issued, and the issuing company receives no proceeds from these trades. It provides liquidity and price discovery, and it is open to retail as well as institutional investors.
- AProceeds from trades go to the issuing company
- BIt is where securities are issued for the first time
- CInvestors trade previously issued securities among themselves, and the issuer receives no money from such tradesCorrect
- DOnly institutional investors may trade there
Explanation
The secondary market lets investors buy and sell already-issued securities, giving liquidity and price discovery. The issuer receives funds only in the primary market. Retail investors can trade freely, so the institution-only option is wrong.
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