Q. With reference to Public Issues in the Primary Market, consider the following statements:
1.An Initial Public Offering (IPO) refers to the first-time sale of shares by an unlisted company to the general public.
2.A Follow-on Public Offering (FPO) is used by a company to sell its shares to the public before it gets listed on a stock exchange.
Which of the statements given above is/are correct?
Quarterly-SFG-Jan-to-March
Red Book

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: A
Notes:

Explanation:

  • An IPO is when a private/unlisted company offers its shares to the public for the first time, thereby becoming a publicly listed company.
  • An FPO is used by a company that is already listed on a stock exchange to raise additional funds by issuing more shares. It does not precede listing; it follows an IPO.

Source- 11th NCERT: Economics: Indian Economic Development and TMH Indian Economy by Ramesh Singh

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