Q. With reference to the methods of raising capital in the primary market in India, consider the following statements:
1.A Rights Issue allows all Indian citizens to subscribe to the company’s shares.
2.Private placement involves raising capital by negotiating directly with a select group of investors.
3.Public issue is considered the most prestigious method of raising capital and is open to the general public.
Which of the statements given above is/are correct?
Answer: A
Notes:
Explanation:
- A Rights Issue is not open to all; it is offered only to existing shareholders of the company.
- Private Placement involves direct negotiations with a select group of investors such as financial institutions or high-net-worth individuals.
- A Public Issue is open to all Indian citizens and is the most broad-based and prestigious method of raising capital.
Source: Indian Economy (Ramesh Singh)
