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प्रश्न
Differentiate between ‘primary market’ and ‘secondary market’ on any five basis.
State any five points of difference between ‘primary market’ and ‘secondary market’.
Differentiate between ‘primary market’ and ‘secondary market’ on the basis of any three points.
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उत्तर
| Sr. No. | Basis of Difference | Primary Market | Secondary Market |
| 1. | Securities Traded |
The sale and purchase of newly issued securities take place in the primary market. There is the sale of securities by new companies or new issues of securities by existing companies to investors. |
The sale and purchase of already issued securities take place in the secondary market. There is the trading of existing shares only that have already been floated in the primary market. |
| 2. | Instruments | The company sells securities to the investor directly or through an intermediary. | Investors exchange ownership of existing securities. The company is not involved in the buying or selling process. |
| 3. | Issued by | Securities are directly issued by companies. | Securities are among investors, and hence, there is no involve. |
| 4. | Price |
Prices are fixed by the company and its management. Prices are determined and decided by the management of the company after giving consideration to a lot of factors. |
Prices are fixed by forces of |
| 5. | Geographical Area | No fixed place for a primary market. | Fixed area and working hours under a secondary market. |
| 6. | Purchase and Sale |
Securities can only be purchased in the primary market. Only buying of securities takes place in the primary market, securities cannot be sold there. |
Securities can be both purchased and sold in the secondary market. Both the buying and the selling of securities can take place on the stock exchange. |
| 7. | Capital Formation |
Directly promoted funds from savers to investors are directly channelized for productive purposes. The flow of funds is from savers to investors, i.e. the primary market directly promotes capital formation. |
Indirectly promoted because the liquidity of securities is augmented. Enhances encashability (liquidity) of shares, i.e. the secondary market indirectly promotes capital formation. |
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संबंधित प्रश्न
Answer the following question:
An investor wanted to incest RS. 20,000 in Treasury Bills for a period of 91 days. When he approached the Reserve Bank of India for this purpose he came to know that it was not possible.
Identify the reason why the investor could not invest in the Treasury Bill.
State how sources can broadly be classified into two major categories.
Answer each of these questions in about one hundred and fifty words:
What is meant by primary market? Briefly explain the concept of ‘Right Issue for existing companies’.
Explain the following term/concept.
Secondary market
Justify the following statement.
Capital market is useful for the corporate sector.
Complete the correlation.
Primary market: New issues launched to raise capital:: ______: Old issues through stock market.
Bank Rate means.
Primary and secondary markets
The most commonly used method for raising funds in primary market is ______.
Read the following text and answer the following question on the basis of the same:
ISQM SOLAR Limited is searching for options to raise Rs. 20,000 crores from the primary market for diversification and modernisation of existing projects. It hired the services of a renowned financial consultancy firm, DHAN LAXMI Pvr LTD. to suggest options for the same. DHAN LAXMI PVI LTD. suggested a list of options to the Board of Directors of the company. It was decided that for the immediate requirement of Rs. 1,500 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. Rs. 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of inviting subscription from the public by making a direct appeal to investors to raise capital. It was further decided to raise capital to the tune of Rs. 6,000 crores through an issuing house. All these options were accepted by the Board of Directors. The Board further decided to raise Rs. 8,000 crores through the online system of the stock exchange by entering into an agreement with the exchange.
"Rs. 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of inviting subscription from the public by making a direct appeal to investors to raise capital."
Identify the method of floatation of new issues in the primary market being discussed above, which the company has decided to use:
Read the following text and answer the following question on the basis of the same:
ISQM SOLAR Limited is searching for options to raise Rs. 20,000 crores from the primary market for diversification and modernisation of existing projects. It hired the services of a renowned financial consultancy firm, DHAN LAXMI Pvr LTD. to suggest options for the same. DHAN LAXMI PVI LTD. suggested a list of options to the Board of Directors of the company. It was decided that for the immediate requirement of Rs. 1,500 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. Rs. 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of inviting subscription from the public by making a direct appeal to investors to raise capital. It was further decided to raise capital to the tune of Rs. 6,000 crores through an issuing house. All these options were accepted by the Board of Directors. The Board further decided to raise Rs. 8,000 crores through the online system of the stock exchange by entering into an agreement with the exchange.
Identify the reason which has made the firm raise funds from the institutional investors :
Which of the following statements is incorrect?
Which among the following is NOT a method of raising the required capital in the primary market?
In its vital role as a financial intermediary, capital markets satisfies the tastes of the savers and the need of the investors. Evaluate the given statement.
Complete the correlation:
Money market : Short term funds :: ______ : Long term funds.
State the following statements are True or False.
Capital market is the market for long-term funds.
Complete the correlation :
Money market: Short term funds:: ______ : Long term funds
Complete the correlation:
Money market : Short-term funds :: ______ : Long-term funds.
Complete the correlation:
Money market : Short term funds :: _____ : Long term funds.
