Q. With reference to the types of Capital Market, consider the following statements:
1.The Primary Market deals with the trading of previously issued securities listed on stock exchanges.
2.The Secondary Market provides a platform for investors to buy and sell existing securities to meet their liquidity needs.
3.Companies raise fresh capital through the Secondary Market.
Which of the statements given above is/are correct?
Quarterly-SFG-Jan-to-March
Red Book

[A] 2 only

[B] 1 and 2 only

[C] 2 and 3 only

[D] 1 and 3 only

Answer: A
Notes:

Explanation:

  • The Primary Market is where new securities are issued for the first time by companies to raise funds. Trading of already issued securities takes place in the Secondary Market.
  • The Secondary Market enables investors to buy and sell existing securities, helping them adjust their portfolios or meet liquidity needs.
  • Companies raise fresh capital in the Primary Market, not in the Secondary Market. The secondary market deals only with trading between investors and does not involve fund-raising by the issuer.

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

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