Question

How does the Primary Market contribute to company capital?

Options

• Only securities of listed companies are bought and sold.

• Directly contributes to company capital; funds move from surplus to deficit units.

• Securities and bonds transferred between investors only.

• Indirectly contributes; exchange of funds between surplus units only.

Answer 1

The Primary Market directly contributes to company capital because funds move from surplus to deficit units. An exchange of funds between surplus units only characterizes the Secondary Market.