Question : What is the main function of the primary market?
Option 1: Trading of existing securities
Option 2: Issuing new securities
Option 3: Trading of foreign currencies
Option 4: Facilitating short-term borrowing and lending
Correct Answer: Issuing new securities
Solution : The correct answer is (b) Issuing new securities.
The primary market's main function is to facilitate the issuance of new securities by companies or government entities. In the primary market, securities such as stocks, bonds, and other financial instruments are offered to investors for the first time. This process is commonly known as an initial public offering (IPO) when it involves shares of stock being made available to the public for the first time.In the primary market, companies or governments raise capital by selling their newly issued securities directly to investors. The funds raised through the issuance of new securities are typically used for various purposes, such as financing business expansion, funding projects, or paying off existing debt.
Question : What is the primary function of the capital market?
Option 1: Facilitating short-term borrowing and lending
Option 2: Financing long-term investments
Option 3: Trading foreign currencies
Option 4: Facilitating real estate transactions
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